BIZ DESK
Selecting the Best life insurance policy is an important choice that will offer your family protection, but you should think about your insurer’s Claim Settlement Ratio (CSR). The more claims settled, the higher the chance of receiving a payout.
Focusing on CSR will allow you to be more confident in your selection and help ensure that your dependents are looked after in the event of something unexpected. This will help you find an insurer that will meet your needs and ensure efficiency.
Understanding the Claim Settlement Ratio in the Insurance Context
The Claim Settlement Ratio (CSR) represents the percentage of claims an insurer successfully settles during a financial year. It’s calculated using this formula:
Claim Settlement Ratio = (Total Claims Paid ÷ Total Claims Received) × 100
For example, if an insurer receives 10,000 claims and settles 9,970, the CSR is 99.70%. Generally, a CSR above 98% is considered excellent.
However, a high CSR alone isn’t enough. You should also check the solvency ratio, which indicates whether an insurer is financially prepared to handle future claims. The Insurance Regulatory and Development Authority of India recommends a solvency ratio of 1.5 or higher. Leading insurers often exceed this, ensuring they are financially robust.
For instance, Axis Max Life Insurance boasts an impressive CSR of 99.70%, which reflects its strong claim settlement track record and the reliability that customers can count on.
What is the Actual Speed of Claim Settlement in Real Life?
In a family difficulty, speed is important. Insurers may have up to a maximum of 120 days to settle a death claim. However, most insurers will set the claim in motion and aim to settle valid claims within a period of around 2 to 4 weeks. If all documentation is in order and the policy has been in place for over 3 years, most can be paid out in less than 10 days.
In addition, some insurers offer small claims fast-track settlement if the claim value is under ₹ 50 lakh and certain conditions are met.
A delay may occur in the claim acknowledgement and settlement process for reasons such as missing documents, incorrect nominee details, undisclosed medical history, and others; hence, the reason many families would rather have insurers who provide as much guidance through the process as possible and not an automated approach.
Types of Life Insurance to Consider Before Comparing Policies
Selecting the right life insurance policy depends on what you are after. Yes, financial security is the end goal, but the methods of delivery can differ.
- Term plans: Provide protection only, meaning that only if the insured dies within the contract term will a benefit be paid. There is no return if the insured survives, but they are very affordable.
- Whole life plans: Offer coverage for life, up to 99 or 100 years. It is ideal for leaving a legacy or providing for dependents in the later stages of life.
- Endowment policies: These are insurance and savings policies that guarantee a payout as a lump sum either on the insured’s death or survival.
- ULIPs: These are market-linked investment and insurance policies aimed at customers primarily concerned with wealth creation as well as protection.
- Money-back policies: The person is entitled to money, or portions of the sum assured amount, at periodic intervals during the life of the policy, enabling liquidity.
- Retirement or pension plans: Designed to create a regular income after retirement, with life cover included in some cases.
What Else Should You Look for While Choosing a Life Insurance Plan?
Apart from ratios and plan types, consider some practical factors. Check for ease of managing your policy after purchase, like the ability to update your nominee online and arrange for auto-debit of the premium payments.
Also, check if there are riders for critical illness, disability cover, and accidental death benefits. These riders can make your coverage more comprehensive without significantly increasing your premium.
Avoiding Claim Rejection: What You Must Get Right
Most claim rejections happen due to common oversights. People forget to declare pre-existing illnesses, use outdated nominee details, or miss premium payments and let the policy lapse.
The good news is that these are all preventable. Insurers with good customer education practices and clear onboarding processes can make a difference here. Some even offer pre-claim counselling so your family knows exactly what to do and what’s needed. This becomes especially important during emotional or high-stress moments.
Keep your policy details accessible. Inform your family. Review your plan once a year, just like you do with tax-saving investments or CIBIL checks.
Quick Summary of Key Evaluation Points
Here’s a quick reference to help you compare plans at a glance:
| Parameter | What to Focus On |
| Claim settlement ratio | Prefer above 98% for track record and peace of mind |
| Solvency ratio | Should be above 1.5; the higher, the better |
| Plan flexibility | Ability to add riders, customise coverage, and choose payout structure |
| Customer support | Track record in claims, complaint handling, and digital service options |
| Suitability | Match the plan to your life stage and financial goals |
Choosing the right life insurance policy is not an easy task. It’s something you review and adapt as life changes. Your 30s look very different from your 50s. What works when you’re single may not be enough when you have dependents.
A strong policy and a stronger insurer make the journey smoother. You don’t want to think about claims, but when the time comes, that’s when everything matters. A high claim settlement ratio, easy claims process, and trustworthy service record become more than just numbers; they turn into actual support for your family.