IRDA published its annual report on 9th January 2019. Let us see the IRDA Claim Settlement Ratio 2017-18 and also which is the Best Life Insurance Company in 2019.
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 a 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 criterion in judging the performance of a life insurance company.
Below is the IRDA Claim Settlement Ratio 2017-18 or up to 31st March, 2018. I differentiated the below table with colour code for your better understanding.
You notice that among total 24 Life Insurance Companies, around 11companies are in GREEN (Claim Settlement Ratio above 95%). Rest of them are below 95%.
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.
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 2017-18.
Here come the results !! LIC stands in lowest with red in colour along with Life Insurance Companies like Exide, Future Genereli, Reliance and Sahara. What is 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 IRDA Claim Settlement Ratio 2017-18 and try to analyze 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 analyze the data of claims pending with Life Insurance Companies in 2017-18 and how old they are.
You notice that ICICI Pru, Kotak Life, SBI Life, Shriram and LIC are leading in pending the claims for more than a year. Reasons may be unknown to us.
Based on the IRDA Claim Settlement Ratio 2017-18, which are the Top and Best Life Insurance Company in 2019? I select only ten based on the above data. You may differ in my view and come up with a 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 give us the specific data. Hence, never rely on this single data alone while shortlisting 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 a 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 a 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
Can a nominee pay (via netbanking) the first premium of the Term plan? Will there be any problem?
Dear Raj,
Why nominee?
Can I buy a term policy from edelweiss tokio? How is this policy, please suggest me...
Dear Arunava,
I suggest a plan from well-setled companies.
Which is the best term insurance to buy in india
Dear Jacobjohn,
Refer my post "Top 5 Best Term Insurance Plans in India 2019".
Dear Basavaraj,
Thanks for a nice blog with much useful info.
I recently , 20 days back purchased a term insurance with HDFC - 1Cr - 85yrs with approx 2.5k premium through Coverfox. Mainly because it had few features like add on rider Waiver of premium in case of Permanent Disability and Critical Illness. Also there was no Medical Checks performed eventhough they mentioned it will happen within a week. Recently I got a call from policybazar stating the claws for these features are very stringent and certification of IMA approved Doctors is must and suggested to switich to Tata AIA as premium for this is approx 1.2k less than HDFC without the features. How can we judge here ? Which company is best for Term Insurance in your view ? What are the other hidden factors that we need check from the company or else where? Where can we get the details of Term insurance data of these companies? Kindly could you help in this regard.
Thank You in Advance.
Dear Manohar,
I can say one thing, both HDFC and Policybazaar playing with you.
Hi,
The claim settlement % as said dont tell amount how much amount. In case of term plan say I took a plan for 50lacs and while settling they settled the amount for 10-15lacs still its considered settled? From where to get info How much claim amount is filed and how much comapny has settled?
Dear Rajanikant,
CSR data is raw data. It will not classify what type of products the companies settled. For example, LIC is topper in claim settlement. However, the average claim amount settled by LIC is like less than Rs.5 lakh. This shows LIC settled mainly traditional plans. Hence, never rely on CSR alone to buy term plan.
I want take policy from PNB met life is it okay please suggest
Dear Vinay,
If you already selected, then what is the issue here?
If Nominee has no surname as per documents for example SITA..And the proposal form shows nominee name as SITA NA. Here NA being told as Not Applicable by insurer. Can it be a cause of dispute or rejection in future.
Dear Sandeep,
NO.
I have initiated process of Max life term plan with return of premium of 75lac with 50 years terms including waiver of premium. Which covers me up to my age 80 and waiver of premium upto age of 65.
Before processing application I told them to take physical medical examination but they took tele-medical and issued policy. I denied the policy.
Now they are not answering or giving me any status of policy since last 10 days.
Should I cancel my policy or any other suggestion?
Dear Kashyap,
Better to cancel.
Dear Sir
I have planned became an agent with Adithya birla life insurance company.
Pls gave me suggestion about company
Dear Dhanjaya,
What suggestion you are looking at?
Hi Basavaraj,
This blog is really useful. Thank you. Can we please get the new updated charts for the year 2018-19?
Also, any tips for NRI's to buy term plans in India? Is the claim settlement ratio different for NRI Term plans?
Please suggest.
Dear Suma,
This is the latest data available. Regarding Term Life Insurance for NRIs, think if you are planning to return before you retire. Otherwise, better to buy in the country where you staying. Claim settlement ratio is company-specific and will not change based on customers. Hence, it will remain same.
Thank you Basavaraj. I was looking at the MaxLife pure term plan of Rs. 2 crore. They mention that there is no medical checkup required if I provide all my financial proofs. But, I am planning to buy this policy only when I am in India for my vacation. So, is it better to get the medical checkup done before buying the policy?
Also, I had been issued a quote for "MaxLife Assured Wealth Plan" with (policy term of 10 years) sum insured of Rs. 57,00,000 for the annual premium of Rs.7.5 lakhs (premium payment term is 5 years). There is a death benefit for this policy.
- They claim that I need NOT pay any GST for the premium- Rs. 7.5 lakhs, if I pay in foreign currency. Is it true?
- Is 2 % TDS applied on my sum insured after maturity?
- The agent says that the amount is completely reptriable to foreign currency after 10 years. Is it true? or is there any trick in that?
- If I opt to convert INR to dollars after 10 years, do I have to pay any tax in foreign country for the profit I earned?
Please suggest. Your inputs are really valuable.
Dear Suma,
Many times these insurance are in a desperate mode to acquire the clients and hence go for non-medical policies. However, if you are declaring the facts properly, then no need to worry.
-I am not sure how they are going to compensate. It is one more lure to acquire the clients.
-Why for limited premium payment and why not regular yearly payment? No, there will not be any TDS.
-It is correct.
-It depends on the country where you reside.
But I logically saying, avoid any company which is eager to issue the policy without medical, by throwing the rules of GST and desperate to get the business. Also, if you are planning to stay forever in the country where you reside, then why you buying term life insurance from India?
Thank you Basavaraj for your prompt response.
I am currently residing in Australia and I have no idea if I will stay here forever or will go back to India :) . I have bought a term insurance here in Australia which is linked to my Super account (an Australian govt declared pension scheme). Now, after 4-5 years if I decide to come back to India, I won't be in a position to pay the premium in $$, as it is too expensive. Considering my age- 32, I want to make sure I buy a term plan in India as a backup option. So that, I can continue it when I'm back in India.
Now, I am actually looking for 2 different plans with MaxLife. One is 'Assured Wealth Plan' and another is 'Pure Term Plan'. I opted the assured wealth plan because of its high returns and death benefit (also GST waive off). I am more concerned about savings for my kids education down the line after 10-12 years. When I looked at the child plans, the returns were very less compared to Assured plans. Also, in Australia the FD/ savings/ child plans interest rates are far less than that of in India.
When they confirm the GST waive off through an email communication, aren't they bound to follow it? Please let me know if there are there any expected flaws/ issues with these kind of Assured plans that i need to be aware of.
About the Term plan, I will definitely avoid buying it without physical medical checkup. Any thoughts about the pure term plans of MaxLife with HDFCLife in-terms of claim settlement and trust.
Thanks again!
Dear Suma,
" I want to make sure I buy a term plan in India as a backup option. So that, I can continue it when I’m back in India."-In that case you can.
Do you think these Insurance+Investment plans suitable for your kid's future goals? You are considering the returns of the country where you stay to the returns in India. A normal NRE account FD is far far better to return generator than these bundled products. Regarding the GST, I still suggest you to reconfirm their claim. Both HDFC and Maxlife are good. You can go ahead (with the cautions I shared).