Unforeseen circumstances can sit at your door anytime. And can make you mentally, and financially weaken. That is why the importance of insurance cannot be exaggerated. In the demise of the policyholder, the insurance company will give a lump-sum amount to its nominee.
However, not all insurance companies and their policies are the same. Some offer additional benefits, some offer flexibility in tenure, while others offer affordable premiums. There are several varieties of insurance products out there in the market, which make it difficult for individuals to choose the one that meets their needs.
This is where the vital feature known as the claims settlement ratio comes into the picture. It’s a numerical factor that helps you in purchasing the best insurance plan. Keep reading on to learn more about this factor.
What is the claim settlement ratio?
The claim settlement ratio of the insurance company is the number of claims paid out by an insurer during the financial year; higher the claims better the insurance company. When choosing the insurance company, you must check the claim settlement ratio. This ratio is used to assess the liability of the insurance company.
In general, this ratio tells you about the number of claims settled out of the total claims filed.
How is the claim settlement ratio calculated?
The claim settlement ratio is calculated with the following formula.
Claim settlement ratio = a Total number of claims paid during the period/ Total claims filed.
The result is represented in the form of a percentage. For example, if an insurance company has a 70% claim settlement ratio, which means for every 100 claims received by the company, 70 has been paid out.
It is crucial to keep in mind that you should always choose a company that has a high claim settlement ratio.
Reasons why Policy Claims Gets Rejected:
When choosing the insurance company, it is advisable to understand its claim settlement process, so that in the time of urgency, you can easily apply for the claim. One of the best ways to determine the claims process is by understanding why policy claims get rejected.
Careless attitude for life insurance
It is crucial to research before purchasing a life insurance policy. There are many sites which allow you to compare the features and benefits of the insurance policies. If you buy the insurance plan without any proper research, you will face difficulty during the claim settlement process.
Missing or incorrect information
When filling the insurance form, double-check the details that you have written. During a claim settlement process, your information will go for verification, in case they found any mistake they will reject your policy claims.
Hiding Medical History
To reduce the premium amount, many people hide their medical history. Habits like smoking, alcohol, or any previous medical illness must be shared with the insurer so that during the claim settlement process, there are no hindrances.
We hope this comprehensive guide on the claim settlement ratio helps you a lot. Finally, after checking this factor, you can decide which insurance plan suits your needs.