How to Evaluate the Best Life Insurance Company in India

July 21, 2021

Life insurance has become an integral part of everyone’s life now yet the results of IRDIA (insurance regulatory and development authority of India) shows that the awareness among the Indians about the insurance is still lacking. Statistics show that about 75% of the Indians are still uninsured. Evaluating all the life insurance plans are a very integral plan of choosing a good insurance plan suitable for you. There are many factors that are crucial and are to be kept in mind while evaluating the best life insurance company.

Claim Settlement Ratio

Claim Settlement Ratio (CSR) is the most important point while looking for a life insurance company. Claim settlement ratio is the ratio of the claims settled by the company to the number of claim per financial year. A higher claim settlement ratio shows that lot of claim are settled. This is a positive sign and thus while evaluating different companies, this becomes an important point of evaluation. Also, a higher CSR shows that the company is customer friendly and it is easier to settle claims. Know top life insurance companies in India 2020 and Latest IRDA Claim Settlement Ratio for Year 2018-19.

Incurred Claims Ratio

Incurred Claims Ratio (ICR) refers to the ability of the insurance company to pay claims. It is the percentage value of claims paid against the total amount of premium that has been collected during a financial year. Having 75%-90% ICR is considered to be good. ICR and CSR are not the same.

Claim settlement ratio is the total number of claims settled with respect to the total number of claims. Whereas, incurred claim ratio is the value of claims with respect to the premium paid. know General Insurance companies in india and Latest IRDA Incurred Claims Ratio for year 2018-19.

Persistency Ratio

This refers to the number of policy holders that have renewed their policy with the best life insurance company. This ratio is measured by the IRDAI at the intervals of 13, 25, 37 and 61 months. A higher persistency ratio is proved to be good for the company since it shows that the customers were satisfied with their policy and want to continue the policy with the same company. It is a symbol of trust between the company and the customers.

Solvency Ratio

The financial situation of the company is a very important aspect. One doesn’t want to put their money into a company whose financial situation is not good. The financial situation is measured by the solvency ratio. The IRDAI says that a company’s solvency ratio should be maintained at 150% so that it is able to protect itself from bankruptcy. A high solvency ratio is a good sign as it shows that the company is able to meet its financial liabilities and has enough money to settle claims.

Commission Expense Ratio

The company has to undertake the expenses which are related to acquiring and writing the insurance policies. These expenses also include commissions for insurance agents, employees, wages etc. The commission expense ratio is the percentage of the expense which is incurred by the company to the premium paid. Premiums are usually higher where the expense ratio is higher. Thus a low expense ratio is considered as good.

Customer Service

The quality of the customer service is important. To evaluate that before you buy the insurance can be a tricky thing to do. Some interactions with the company will however give you an idea of how the quality of customer service is. It is very much possible that the customer may have a bad experience after buying the policy, although it is purely subjective.

Online reviews can help here a lot. Looks for reviews of the company and see if there are any repetitive complaints. Complaints like delays or high rejection of claims should raise a red flag. Although, you are not make up your mind after reading just one review.

These are the very basic points to be kept in mind when you evaluate a company. It is very essential for you to buy a life insurance that fits your needs and is suitable for you. Read and research carefully before you decide to put your money into the company’s hands.

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