Choosing the right life insurance company is almost as important as choosing the right life insurance plan, if not more. Being with the wrong insurance provider may end up becoming a long-term regret for you and your family.
When buying a life cover, it is essential that you as well as your loved ones have a clear idea of what life insurance is and how it works. This helps you select the right type of life cover. In addition to this, it is also necessary to know how to select the right life insurance company.
Understanding Life Insurance
Life insurance plans are a way to cast a financial safety net around your family and enable them to face the unforeseen future without having to face any financial stress. Before you buy a life cover, know that there are several types of plans available to address the varying needs of consumers.
Before buying a life insurance plan, take the time to get to know what your options are. Create a shortlist based on your goals and what the plan has to offer. Look for a life insurance premium calculator on the plan page to get premium estimates for your desired policy duration and sum assured.
When Choosing an Insurance Provider
Let’s take a look at some of the factors that can help you select the best life insurance company.
Claim Settlement Ratio
If you have been browsing for life insurance, or any other sort of insurance for a while now, you may have come across the term ‘claim settlement ratio’. What does it mean? Claim settlement ratio is a value that represents the claims successfully settled by the company in the past year as compared to the claims received by the company.
As a consumer, you ought to choose a company with a higher claim settlement ratio, as it reflects that the company settled a high number of claims it received. The value is usually represented as a percentage. A company with a high claim settlement ratio is considered to be a solid option for consumers, as it increases the chances of their claims being settled.
Company’s Financial Profile
The financial profile of the company can help you get a clear idea of the financial health of the company. This also helps you understand whether you can rely on this company or not. Usually, financial statements released by a company can help you understand where the company stands financially. However, if you are not well-versed with the jargon, you also look at what trade experts and analysts have to say about the company.
Persistency ratio is a value that reflects how many people have paid their insurance renewal premium. It is a ratio of the number of premiums paid for a policy vs the number of premiums payable for the same.
It is usually measured at regular intervals by the IRDAI. At present, it is measured at intervals of 13, 25, 37, and 61 months. It shows the willingness of customers to stay with the insurance provider and also a policy.
The higher the persistency ratio, the better the customer satisfaction levels may be.
An insurance provider’s presence matters for the consumer, if they are expecting satisfactory service standards. This includes the company’s online as well as offline presence. Before opting for an insurance provider, check whether they maintain a presence that you may be able to rely on. For example, are their app and their website functioning well? Do they have a branch that is easily accessible to you? Are you happy with the customer service they offer? Checking for these things beforehand can help you minimise any inconveniences at a later stage.
Solvency ratio is a value that reflects the financial situation of your insurance provider. It can be calculated as the net income and the depreciation of the insurance company, divided by its liabilities. This value paints a picture of how capable the company is of handling claims if it were to receive an above-average number of claims. This is a possibility in cases of natural calamities like tsunamis, floods, earthquakes, and so on.
As a consumer, you must know what an insurance provider has to offer before you take your business to them. Usually, an insurer offering a wide range of products means that you have more options to choose from. It is more likely that you will be able to find something closer to what you are looking for.
Once you understand what life insurance is and have decided to get a life cover, your next step should be to look at whether the insurance company is the right match for you. These parameters should help you get a better idea of how to choose the right life insurance provider. Once you have decided on the right insurance provider and the right plan for you, ensure that you get premium estimates using a life insurance premium calculator. With these steps checked, you should be ready to commit to a life insurance plan.
I am Arjun Kumar. I am the owner and administrator of Finance Gradeup. I have completed my education in Arts & Technology. Arjun Kumar usually has interests in playing games, reading and writing. He was a brilliant student during his college days. He also works for many private companies, but the main interest of Arjun Kumar is digital marketing. He thinks that reading is a must before providing any quality information to his readers. You can find Arjun Kumar on much social media handles online, or you can learn more about him in about us page.