On 15th December, 2016 IRDA published Annual Report for FY 2015-16. Let us see which is the top and best Life Insurance Company for 2017 based on claim settlement ratio 2015-16.
Note:-IRDA published the Annual Report for 2016-17. I have written the post on that. Refer the post “IRDA Claim Settlement Ratio 2016-17 | Best Life Insurance Company in 2018” for latest data.
Claim Settlement Ratio is the indicator how much death claims Life Insurance Company settled in any financial year. It is calculated as the total number of claims received against the total number of claims settled. Let us say, Life Insurance Company received 100 claims and among that it settled 98, then claim settlement ratio is said to be 98%. Remaining 2% claims the Life Insurance Company rejected.
Based on this, we can easily assume how much customer friendly they are in dealing with death claims. However, I warn you that this claim settlement ratio is raw data.
It will not give you clear picture of what types of products they settled. They may be Endowment plans, ULIPs or Term Insurance Plans. Hence, this is not a sole criteria in judging the performance of a life insurance company.
Below is the Claim Settlement Ratio 2015-16 or up to 31st March, 2016. I differentiated the below table with colour code for your better understanding.
Green-Claim Settlement Ratio from 90% to 100%
Yellow-Claim Settlement Ratio from 80% to 89%
Red-Claims below 79%.
You notice that among total 24 Life Insurance Companies, around 12 companies are in GREEN (Claim Settlement Ratio above 90%). Total 10 companies are in YELLOW (Claim Settlement ratio between 80% to 89%). Total 2 companies are in RED (Claim Settlement Ratio below 80%).
As usual LIC tops the list. But don’t feel happy. Let us see the claim amount settled by individual companies to arrive at best companies.
The biggest surprising factors from Claim Settlement Ratio of 2014-15 to Claim Settlement Ratio of 2015-16 are as below.
# Star Union‘s last year the claim settlement ratio was 94%. Hence, I intentionally flagged it RED. Now see this year’s result. It’s claim settlement ratio dropped to 81%. A drop of 13%.
# Reliance Life is one more big changes. Last year the claim settlement ratio was 84%. But this year, it jumped to 94%.
# PNB Met Life‘s last year’s claim settlement was 93%. But this year, it dropped to 85%. A change of 8%.
# Birla Sun Life‘s last year’s claim settlement was 95%. But this year, it dropped to 88%. A change of 8%.
# IDBI Federal Life‘s last year’s claim settlement was 76%. But this year, it increased to 85%. A change of 9%.
# Aegon Religare Life‘s last year’s claim settlement ratio was 90%. But this year, it increased to 95%. A change of 5%.
# Edelweiss Tokio‘s last year’s claim settlement ratio was 60%. But this year, it increased to 85%. A change of 25%.
# DHLF Pramerica’s last year’s claim settlement ratio was 57%. But this year, it increased to 84%. A change of 27%.
Now you noticed that new companies claim settlement ratio changing so high around 27% to 8%. Why such change? No specific answers to such big changes (either positive or negative).
So do you feel this data a reliable one? I stay with insurance company which gives me stable and consitent result than such a sway in business data.
As I said above, the claim settlement ratio will not give you the clear picture about which type of products the insurance companies settled. However, we can assume the types of products they settled by looking at the average claim settlement amount of Life Insurance Companies in 2015-16.
Here comes the results !! LIC stands in lowest with red in colour along with Life Insurance Companies like Sahara, Reliance Life, Exide and Future Generali. What it indicating?
It shows that, even though LIC settled the highest number of claims, the majority of such claims are less than Rs.2,00,000 Sum Assured. Hence, it is indicating indirectly that LIC’s claim settlement is mainly in the category of Endowment Plans but not Term Insurance.
Now let us go deeper into Claim Settlement Ratio 2015-16 and try to analyse the how much amount of claims they rejected. Here, I calculated average amount as I don’t have data to check the maximum and minimum amount.
The results are as below.
You notice that Sahara’s claim rejection amount is less and then comes the LIC. LIC’s claim rejection is less because the quantum of claims it handles is HIGH but value is less. So no need to say that LIC done a great job here.
The greatest fear for all of us is how fastly the Life Insurance Companies settle the claims. Let us now analyse the data of claims pending with Life Insurance Companies in 2015-16 and how old they are.
You notice that Kotak Life, Reliance Life, SBI Life, Shriram and LIC are leading in pending cases which are more than a year. Reasons may not be know. But it indicates that there are some issues either with insured or insurer.
I don’t want my Life Insurance Company will delay claim settlement for a year or so. In my view, it must not go beyond 6 months. But delay fears me to look at these companies.
Based on the IRDA’s Claim Settlement Ratio 2015-16, which are the Top and Best Life Insurance Company in 2017? I select only five based on above data. You may differ in my view and come up with different set of ideas. But these are my choices.
# Claim Settlement Ratio is raw data
As I pointed above, claim settlement ratio is just a raw data. It will not gives us the specific data. Hence, never rely on this single data alone while short listing the insurance company.
# Concentrate on Product rather than company
Choose the product which suits your requirement and premium affordability. Declare the facts properly. Never hide any material facts. If all these you do, then an insurance company will have to accept your claim. Never give room of suspicious on you to reject the claim.
# Section 45 of Insurance Act will guard YOU
According to Section 45 of Insurance Act “No policy of life insurance shall be called in question on any ground whatsoever after the expiry of three years from the date of the policy, i.e. from the date of issuance of the policy or the date of commencement of risk or the date of revival of the policy or the date of the rider to the policy, whichever is later”.
It says a lot. Even if you shared wrong information or hid some material facts, then also it is purely life insurance Company’s responsibility to dig deep and find out faults WITHIN 3 YEARS ONLY. After 3 years, they cannot question. Note the period of 3 years, it is from the date of issuance of the policy, or the date of commencement of risk or the date of revival of the policy or the date of a rider to the policy, WHICHEVER IS LATER. So let us say if you took the policy today and after a few years the policy lapsed due to non-payment of premium. However, you thought to renew it again and paid all dues. In such situation, this 3-year period starts from such revival date, but not from the original policy issued date.
Read the complete details about this IMPORTANT act of Life Insurance in my earlier post at “Term Insurance-Claim Settlement Ratio no more a big criteria”.
# Disclose the facts Properly
While buying Life Insurance products, you must fill the proposal form on your own. Never allow any agent or Life Insurance Company representative to fill it. Disclose the facts properly without hiding anything. This will really help you in big way. Also, it will not give any room for insurers to reject your claim.
Do the things properly which are in your hand. Rest HOPE for the best 🙂
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View Comments
What criterias should one consider before buying any Life Insurance. And which is the best Life Insurance provider currently.
I am a smoker and 30 years of age. Please also suggest the insurance amount one has to consider.
Please provide you response.
Dear Sachin,
There is no such yardstick to select and also there is no such BEST. Check the product feature and eligibility. If you are comfortable with features and premium affordability, then go ahead. Regarding the quantum of cover, the random ideal cover should be around 15-20 times of your yearly income+any existing liability.
Hi Basu,
Thank you for this article.
Me & my wife both are working. But don't know how long she will work. Shall I get term insurance for both?
For critical illness & accidental shall I take two different term insurance?
Pravin-Yes, if you both are working and someone financially dependent on you and wife (even mutually), then go ahead for Life Insurance. For critical illness and accidental insurances, better to buy from non-life insurance companies.
My yearly salary is 5lakh my tax is 12875 how much i have to invest to rebate for 80c to save 12875.
Pankaj-Invest to achieve your financial goals but not to JUST SAVE TAX.
Sir,
Though the Companies like HDFC and ICICI have very high Claims Settlement Ratios but the total Claim Benefit Amount paid by them (in terms of Percentages) range from 60-70% and 75-90% only in last three years respectively. However I have observed that only Max Life has good consistent ratios of above 90% in both parameters.
So considering the fact that CSR is just a raw data; still my above mentioned observation is right or incorrect. Whether the CSR should be seen along with Total Claim Benefit Amount Paid%. Whether Max Life should be considered as a better company than the both (HDFC and ICICI) in terms of settlement ratios
Paras-I still not consider CSR for my purchase. Because there are 1000000 reasons to reject the claim. Without knowing the reasons, it is hard to judge any company.
Hi,
I have taken a term insurance from Ageon Religare. Against my policy they are offering me term insurance for my spouse.
I would like to know that is it logical and financially good decision to buy term insurance for my non working wife. Is it worth to buy term insurance for house wife or it is just a marketing strategy.
Please guide me for the same.
Amit-1-Life Insurance is required if you have any financial dependents. If your wife is non-working and NONE are financially dependent on her, then it is SIMPLY WASTE.
Thanks for your response.
It means we should avoid term insurance for non-working spouse as their is no financial dependency.
Amit-1-YES.
Max life Insurance is best, for term plan Max life gives guaranteed benefits in Super Term Plan and Online Term Plan
Kokal-What is the GUARANTEED BENEFIT here?
Hi Basu,
I have gone through you blog and its clear lot many question , I am so thankful for it. I have compared term policy on Policybazar and as you said they asked for all your detail. The adviser has guide me on comparison but I found thing which visible on screen. I have few question about Max life term insurance.
1. whether can we change insurance from one to another.
2. I earned 85000/month and have home loan also , whether I have to go for 1 Cr or more than that.
3. Whether I can purchase insurance policy online directly from site?
4.How will be the claim process when I will be not there, just concern about the claim settlement ratio. how easy it is..?
5. Whether Insurance company provide valid receipt or certificate when purchased online..?
Please provide your opinion.
Warm Regards,
Naresh
Naresh-1) NO.
2) Hard to say. But the ideal cover should be around 15-20 times of your yearly income+the liability.
3) YES.
4) Your nominee has to approach the insurance company.
5) Yes. Along with that, they send you the policy bond hardcopy.
Thanks Basu, Quite helpful , Just one more concern, purchasing policy through policy bazaar is Ok to go ahead. I am getting call from them.
Naresh-If there is no premium difference, then no issues.
Thanks Basu for guidance
Hi,
I am planning to buy term insurance for myself.
Can you suggest which company is better. Shall I go for maxlife or pnbmetlife. I came to know that pnbmetlife gives cover till 99 year however I have concerns about settlement ratio.
Can you please suggest which company should I go.
Ashish-Do you think that you need Life Insurance till 99 years of age?
We don't need but in that case we will at least get some amount as refund - maturity benefits as well at same premium where maxlife is just giving cover till 75. Hence that thought came into my mind.
Please help if it's otherwise.
Ashish-What is the value of that SOME AMOUNT after 99 years of your age or even after your 75 years of age?
Then in that case what should be ideal age we should go for term insurance.
Please suggest...
Little bit confused...
Ashish-When you retire? When you be free from financial responsibilities. When you are free from financial responsibilities, then you no need of insurance. Hence, you need insurance up to your retirement.
Thanks for your suggestions. It means maximum we should take insurance till the age of 60 -70 years.
Ashish-Yes.
Hi Basavaraj,
I found this artical very usefull. Can you share same for FY-16-17 Now and is there any change in preferred list of Insurer.
Also can we option more than One term policy . and if Yes which one is better 1. .To have One Policy with higher Amount or two policy from different Insurer.
Virender-Let me publish when I get IRDA report. Yes, you can have more than one term insurance either within same insurer or from different insurers.
Hi Basu Nivesh, thank you for this nice compilation and useful data. Really appreciate it.
In your comments you advised someone to go with only term policy.
I was also looking at vanilla term policy only, till I came across critical illness rider. It seems to be good.
Would you recommend to go in for this rider or search for options with different plan? And go ahead with vanilla term insurance .
Looking for your comments.
Praful-If you feel critical insurance required, then buy it from non-life insurers.
Examples of no life insurers
Rahul-They are listed in my blog post "IRDA Incurred Claim Ratio 2015-16 | Best Health Insurance Company in 2017".