It is difficult to put a price on the value of a human life but over the years life insurance providers have found a way to quantify it. As you already know, a life insurance policy is one way in which you can provide some amount of financial security to your family in the event of your death. Another fact that is well known among most individuals who hold life insurance policies is that you should buy a life insurance policy as early as possible.
However, there are a few other facts about life insurance plans that many of us are unaware of. In order to find a life insurance plan that will be a good fit for you, it is important to compare plans across insurance providers. The points that follow will help you make an informed choice about the type of life insurance plan that will best suit you.
5 tips to help you choose the right life insurance plan
Claim settlement ratio
While shopping around for an insurance policy, it is important to examine the insurance provider’s claim settlement ratio. High claim settlement ratios are seen more often among insurance providers who have been in the industry for a long time. Therefore, it is advisable to purchase a policy from a reputed insurance provider rather than an insurance provider that has been around for a relatively short period. Choosing an insurance provider with a high claim settlement ratio can provide you with the peace of mind that your family’s financial needs will be taken care of after your death.
Time taken to settle claims
In relation to the point above, it is also important to evaluate the time that the top insurance provider takes to settle claims. This is a fairly important factor to assess as well. Having to worry about one’s financial situation at a difficult time can prove even more stressful and, in a way, defeats the purpose of having a life insurance policy to begin with. With the growth of the insurance industry in India, a number of insurance providers now have teams dedicated to settling claims raised by beneficiaries of life insurance plans. There are a few insurance providers who settle claims within a time frame as short as 24 hours.
Persistency of claim settlement
Along the same lines of having a high claim settlement ratio, another factor that you should examine is the persistency ratio of the policyholders. In a number of instances, policyholders switch insurance providers after 1 year. The insurance provider’s profile will usually contain information about how many policyholders have chosen to continue with their insurance plan beyond the 1-year mark.
Examining the persistency ratio will show you the number of active life plans the insurance provider has in their profile. It also helps determine the credibility of the insurance provider and indicates high customer satisfaction.
When comparing insurance plans across insurance providers, you should also understand that the cost of the plan you choose varies based on the riders that you add to it. For each insurance provider, the base cost of the policies that they offer remains the same since the base cost is set according to mortality rate and the age range of the customer.
The policy brochure of every insurance plan contains a section with the circumstances that the policy does not cover. It is crucial that you evaluate this section of the policy brochure before choosing a plan. Clarify any doubts regarding the exclusions mentioned in the brochure.
Additionally, the annual reports by the Insurance Regulatory Development Authority of India (IRDAI) provide a list with the claim settlement ratios and persistence ratios of all the insurance providers in the country. This can be helpful in narrowing down your choices for an insurance provider that best suits you.
The points mentioned above are just a few of the aspects of an insurance policy that can help you pick the insurance policy that is right for you. Additionally, your financial capability to pay the premiums regularly and understanding why you need a life insurance plan and other factors that should also be assessed when buying a life plan.