When someone decide to purchase online term plan with little bit of search and gyan, first thing what they look for is claim settlement ratio of insurer. But do you think that ratio only matters?
Yesterday Finance Minister informed to Rajya Sabha about the number of complaints registered against insurer for unfair business practice during the period of 2012-13. Below is the list of top achievers 🙂
1) HDFC Standard Life-33,813
2) Bajaj Allianz-21,745
3) Birla Sun Life-21,651
4) ICICI Prudential Life-16,891
5) Reliance Life-16,401
Compare to these complaints, LIC numbers were far less (2,538). Meaning of unfair business practices according to ministry is, selling policies by making false lucrative offers at the point of sale. So do you believe they will be loyal to you throughout the policy period?? Start thinking 🙂
Now few may think that I am canvasing for LIC, no I am not. Because usually few people select LIC for it’s claim settlement ratio. But see the below myth of that calculation too.
A valid point what I found from Subramoney is, even claim settlement ratio will also actually showing you the wrong picture. Suppose an existing insurance company settled 9 claims in a year and repudiated 1 claim, but if total SA of all settled claims is around Rs.45,00,000 still it shows 90% claim settlement. Whereas a newly established insurance company settled Rs.1,00,00,000 SA of one claim application and rejected 1 from the received total 2 applications, shows 50% claim settlement. But in reality small company paid more than existing to it’s clients. So need of the hour is change in IRDA data to show the clear picture about health and quality of insurance company.
Lot of term insurance seekers thought to go safe by taking LIC’s offline term plans. Reason for that is LIC’s highest claim settlement ratio. But in my view majority of LIC’s settlement will be for traditional plans not for term plans. Because till day, LIC’s strength is it’s agent force and traditional plans, which it does not want to alter by offering online term plans. So with lack of data about what type of plans settled and how much sum assured LIC settled, it is not wise to blindly go with LIC brand.
Learning is, before going with price comparison, claim settlement ratio and company service, first understand the product fully, make knowledgeable yourself and your family (because after your death your family need to go to insurance company for claim settlement) and finally honestly declare the materiel facts which your insurance company ask for. Rest will be in “God’s Hand” 🙂