What is Claim Settlement Ratio?
This is a ratio that measures the number of claims that are accepted and paid by the company. We can define it as the ratio of the number of claims that are settled to the number of claims that the company receives.
Claim Settlement Ratio = (Number of claims approved/Number of claims received) * 100
This is quick and easy to calculate and is expressed in the form of a percentage. It is also generally seen that the higher the ratio, the better.
For example, if there are 100 claims in total that a company receives, but the company can pay back only 97 of them, then the Claim Settlement Ratio is 97%.
S.NO | LIFE INSURERS | CLAIM SETTLEMENT RATIO (% of policies) | CLAIM SETTLEMENT RATIO (% of amount) |
1 | TATA AIA Life Insurance | 99.07 | 96.20 |
2 | HDFC Life Insurance | 99.04 | 91.92 |
3 | Max Life Insurance | 98.74 | 94.27 |
4 | ICICI Prudential Life Insurance | 98.58 | 92.51 |
5 | Life Insurance Corporation | 97.79 | 95.32 |
6 | Reliance Nippon Life Insurance | 97.71 | 93.35 |
7 | Kotak Life Insurance | 97.4 | 92.31 |
8 | Bharti Axa Life Insurance | 97.28 | 95.61 |
9 | Aditya Birla Sun Life Insurance | 97.15 | 89.93 |
10 | Exide Life Insurance | 97.03 | 89.40 |
According to IRDAI's report of 2020-21, these are the companies with the highest CSRs.
Another thing to look at while analyzing these ratios is the amount of the claims that are settled. It is often seen that many insurers settle the claims of policies with lower values, but it is usually the policies with higher values that remain unsettled. This could be understood with the help of an example.
For instance, out of 100 claims, a company has 95 that are traditional life insurance with low amounts, say an average of Rs. 5 lacs while there are five high amount term insurance plans with an average amount of say Rs. 1 crore. If a company settles 95 of the traditional plans, then it has a 95% ratio, which is favorable. However, out of the total amount of Rs. 9.75 crores, only a claim of Rs. 47.5 lacs were settled, which is 48.72 %. So one also needs to see the claim settlement ratio as per the benefit amount.
The Best Term Life Insurance Companies
Transamerica
Via Policygenius's Secure Website
Transamerica
Very good
Yes
Yes
up to age 105
Yes
up to age 75 (for best health rating) or 70
Decrease only
any time
AIG
Via Policygenius's Secure Website
AIG
Excellent
No
Yes
up to age 95
Yes
up to age 70
Decrease only
after 2nd policy year
Pacific Life
Via Policygenius's Secure Website
Pacific Life
Excellent
No
Yes
up to age 90
Yes
up to age 70
Decrease only
after 1st policy year
Term Life Insurance Company Ratings
| Company | Price competitiveness | Policy benefits | Forbes Advisor rating |
|---|---|---|---|
| Transamerica | Very good | Excellent |  |
| AIG | Excellent | Good |  |
| Pacific Life | Excellent | Good | |
| John Hancock | Very good | Good |  |
| Lincoln National | Very good | Good | |
| Protective | Very good | Good | |
| SBLI | Very good | Good | |
| Securian Financial | Good | Very good | |
| North American | Fair | Very good |  |
| Penn Mutual | Good | Good | |
| Prudential | Fair | Very good | |
| Legal & General America | Very good | Fair | |
| American National | Fair | Very good |  |
| Mutual of Omaha | Fair | Good | |
| Principal | Good | Poor |  |
What is Term Life Insurance?
Term life insurance is a policy where you choose the length of coverage, usually starting at five years. Other choices are 10, 15, 25, and 30 years. A few companies offer 35-year term life policies, and two companies offer 40-year policies: Banner Life and Protective Life.
Being able to choose a length is ideal if you need life insurance to cover a specific financial concern, such as income replacement during your working years. This would give your family a replacement for your salary if you pass away unexpectedly.
Other worries that can be covered by term life insurance include:
- Covering the length of mortgage debt
- Covering the years until your children graduate from college