Insurance Regulatory Development Authority (IRDA) has released its Annual report for 2014-2015 on 19th January, 2016. Based on the annual report I had listed down Top 10 Best best Life Insurance companies. The criteria for the selection is Claim Settlement Ratio 2014-15.
What is Claim Settlement Ratio w.r.t Life Insurance?
Claim settlement is one of the most important services that an insurance company can provide to its customers. Insurance companies have an obligation to settle claims promptly. For instance, if a life insurance company receives 1000 death claims and settles 950, the claim settlement ratio of that company would be 95%. We can also calculate Claim Settlement Ratio based on benefit/claim amount paid.
Based on IRDA’s annual report I have collated some important points as below;
Life Insurance : Benefits Paid in 2014-15
- The total amount of benefits paid by life industry was Rs 2,11,180.27 crore in 2014-15 (Rs 2,16,395.63 crore in 2013-14).
- The benefits paid by the private insurers stood at Rs 67,054.52 crore (Rs 58,380.09 crore in 2013-14) constituting 75.82 per cent of the premium underwritten (75.47 per cent in 2013-14).
- LIC paid benefits of Rs 1,44,125.75 crore in 2014-15, constituting 60.14 per cent of the premium underwritten (Rs 1,58,015.54 crore in 2013-14, 66.69 per cent of the premium underwritten).
- The benefits paid on account of surrenders / withdrawals stood at Rs 99700.76 crore, of which LIC accounted for Rs 46,537.61crore and private sector Rs 53,163.15 crore.
- In the current year, in case of LIC, out of the Rs 46,537.61 crore surrenders, ULIP policies accounted for Rs 23,224.49 crore (49.90 percent) as against Rs 38,967.66 crore (65.35 per cent) in 2013-14.
- In case of the private insurance industry, the ULIP surrenders accounted for Rs 48,657.89 crore (91.53 per cent) in 2014-15 as against Rs 44,541.11crore (94.18 per cent) in 2013-14.
Life Insurance : Death Claims paid in 2014-15
- In the year 2014-15, the life insurance companies had settled 8.51 lakh claims on individual policies, with a total payout of Rs 11,788.67 crore.
- The number of claims repudiated/rejected was 18,231 for an amount of Rs 701.69 crore.
Life Insurance Companies’ Death Claims Settlement Ratio 2014-15
- The claim settlement ratio of LIC was better than that of the private life insurers. Settlement ratio of LIC had increased to 98.19 percent during the year 2014-15 when compared to 98.14 percent during the previous year.
- The percentage of repudiations was 1.15 percent in 2014-15 remaining almost at the same level (1.10 percent) as of the previous year.
- For private insurers, settlement ratio had gone up by 1.09% at 89.40 percent during the financial year 2014-15 when compared to 88.31 percent during the previous year.
- The percentage of repudiations for private insurers was at 7.78% in 2014-15 against the 8.03% for 2013-14.
- The overall industry’s settlement ratio had slightly increased to 96.97 percent in 2014-15 from 96.75 percent in 2013-14.
How to read above IRDA Claim Settlement Ratio Table?
Let me explain on how to understand the numbers given in the above table. Let us consider Sl.No 1 which has data regarding LIC. During the period 2014-15 the total number of claims (no of policies) received by LIC of India are 7,55,901. This is inclusive of last period’s pending claims (if any) and this period’s (2014-15) claims that are booked or intimated.
7,42,243 policies out of total 7,55,901 policies were settled during the period 2014-15. This translates into a claim settlement ratio of 98.19% for LIC.
The total claimed amount (Benefit Amount) on LIC policies during 2014-15 was Rs 9,480 crore. Out of which Rs 9,055 crore worth of claims were settled.
As per the above explanation LIC gets 98.19/100. So, what happened to 1.81% (100-98.14%) of claims (no of policies)?
These claims fall under the category of claims repudiated or pending or written back. (Repudiated means Claim rejected. Pending are yet to be settled and Written back claims are ‘sent back for more information)
Top 10 Best Life Insurance Companies based on Claim Settlement Ratio 2014-15
- LIC : In 2013-14 LIC’s Claim settlement Ratio was 98.14%. This is slightly improved to 98.19% in 2014-15. LIC is the best life insurance company as per claim settlement ratio. LIC had the best Claim Settlement Ratio in 2013-14 too.
- Max Life Insurance
- Birla Sunlife Insurance
- TATA AIA Life Insurance company
- Star Union
- ICICI Prudential Life Insurance : ICICI Pru life’s claim ratio has fallen slightly from 94.10% to 93.80%.
- PNB MetLife
- Bajaj Allianz
- Kotak Life
- HDFC Standard Life : There has been a considerable fall in HDFC Life’s Claim Settlement Ration in 2014-15 when compared to 2013-14 data.
Important Points to ponder upon
- The claims settlement ratio does not talk about the type of policies i.e., whether the claims that were received are Term or endowment or money back plans.
- Before buying any type of plan, do look at the company’s Claim Settlement Ratio. But kindly note that Claim ratio is just one of the factors and not THE factor when buying a Life Insurance Policy.
- Though Claim Settlement record is one of the important factors while choosing your life insurance plan, it is advisable to go for only Term Insurance. You can opt for a Term plan based on the claim settlement record. The other deciding factors can be cost of premium, features, optional riders, quality of service and your comfort level with the Brand. (You may like reading : Top 7 Best Term Insurance Plans).
- Do not hide any facts while filling the proposal form. This will ensure that your claim (in any unfortunate event happens) is settled.
- As per the recent amendment to Section 45 of the Insurance Act, If your policy is 3 yrs old, no matter what happens, the life insurance company will not be able to deny the claims. So, your life insurance company has only 3 years in hand to reject the policy based on any mis-representation or mis-statement. Once 3 policy years are completed then the life insurance company has to settle the claims and can not reject them.
Most companies cite incomplete documentation or concealment of facts as a reason for rejecting claims. Hence, while buying a life insurance it is of utmost importance that you furnish accurate information and ensure that all paper work is into place. Give importance to claim settlements record and do not get swayed away by higher returns / tax benefits alone.
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(Image courtesy of Stuart Miles at FreeDigitalPhotos.net)
(Reference : IRDA Annual Report 2014-15)
This post was last modified on July 11, 2023 10:45 am
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CAN THE LAPSED AND TERMINATED INSURANCE POLICY OF ICICI PRUDENTIAL BE ATTACHED TO ANOTHER NEW POLICY OF PNB METLIFE INSU. BEING TAKEN SIMULTANEOUSLY IN VIEW OF SETTLEMENT OF THE SAME WITH ICICI PRUDENTIAL. PLEASE ADVICE, WHETHER IT IS FRAUD OR SCAM ???
Dear VIKAS,
What do you mean by attached? Could you kindly rephrase it, unable to understand your query..
Dear Shreekant
I m confused to purchase from icici pru or aegon term plan
I like Aegon features but can we reliey on this for payment when needed
Dear Ankit,
As long as you submit the required details in Proposal form (Application form) honestly and accurately, kindly do not worry about claim settlement.
You may go ahead and buy a term plan from any Insurer of your choice.
" As per the recent amendment to Section 45 of the Insurance Act, If your policy is 3 years old, no matter what happens, the life insurance company will not be able to deny the claims. So, your life insurance company has only 3 years in hand to reject the policy based on any mis-representation or mis-statement. Once 3 policy years are completed then the life insurance company has to settle the claims and can not reject them."
Dear Sir, i want to make Max bupa health companion insurance policy.. should i consider max life claim settlement ratio for max bupa.. have these two same CSR?
Dear Aman..You need to have a look at Claim ratio of Health insurance related data and not Life insurance data.
Kindly read latest article : Incurred claim ratio of Health insurance companies 2015-16.
Hi Srikanth,
Iam at 40,Can I go ahead with this term plan->AEGON Life iTerm Plan and tell me whether it covers accidental death and permanent disability.
I do have traditional Jeevan Anand,Can I discontinue Policy.
Please Suggest me.
Regards,
Naveen.
Dear Naveen,
Once you get term plan, can discontinue the existing lic policy.
Advisable to buy a stand-alone Personal accident insurance plan to get comprehensive coverage.
Hi Shreekanth,
Really insightful article. I am planning to buy term insurance around 1 Cr for 30 years...and shortlisted 2-3 companies...ICICI iProtect, HDFC Click2Protech and Max Life Online....
Out of 3, Max Life has least premium and good CSR...so inclined towards Max Life....
Please note that Max Life has 93% of CSR (%of Benefit) where as HDFC has only 65%.....
I have couple of questions if you can please reply:
1. There is a merger plan between Max Life and HDFC. Can we expect same CSR (% of Benefit) of Max Life after merger or it could be decreased significantly....Also, There is around 3 to 4 thousand of difference between premium of both. Is it good opportunity to buy Max Life and later (after merger) enjoy brand name - HDFC?
2. We are considering CSR as of now...but what is guarantee that same CSR will be there after 5 years....
3. Should we give importance to CSR (% of Benefit) ?
4. I dont see any difference in buying policy from Insurance company's online portal and Policybazaar/myinsuranceclub etc....any idea why?
PS: Thanks for repeatedly mentioning about Sec 45 of the act...I personally checked at IRDA site and its 100% true....
Regards,
Himanshu
Dear Himanshu,
1 - Merger has been approved but may take some more months for it to happen.
2 & 3 - As you are aware of Sec 45, kindly go ahead and buy a term plan from a company of your choice. Kindly disclose all the required info in the proposal form.
Hi Sreekanth,
Im zaheer , 33 years young.
i want to take a pure term insurance with some riders.
i short listed few,
1. ICICI pru
2. HDFC C2P
3. birla sunlife
please suggest a best company for me to sign up. Im particularly interested in birla Sun life as they give all riders with minimum premium. Please tel me more about birla Sun life . Thanks
Zaheer
Dear Zaheer,
Kindly Read :
Top online term insurance plans.
Why one needs to take stand-alone Personal accident insurance cover?
Hye Sreekanth Reddy
Myself Sumit Kumar, aged 36 years, Male, having widow mother, wife, three children fully dependent upon me. I have one LIC Plan "Jeewan Saral" the premium of which is Rs.1500/- per month. I want a plan which would help my family in case of any mis-happening. I can pay monthly premium of Rs. 500/- to 800/-. Kindly suggest the cheat and best plan as per my paying capacity.
Regards
Sumit Kumar
Dear Sumit,
You have to consider taking a Term insurance plan at the earliest.
Once you buy it then you can discontinue the existing lic policy. You may also consider buying a Personal accident insurance plan.
Kindly read:
Best term insurance plans.
How to get rid off unwanted life insurance policy?
Traditional life insurance plan - a terrible investment option.
Best Personal accident insurance plans.
Hello Sreekanth Sir,
Thanks for your kind assistance on my query.
Sir, I want to know which company's term plan is best one. As you guided me to take term insurance first and then to discontinue the existing policy. The premium of my existing LIC Jeewan Saral Plan is Rs. 1500/- per month. I want to know that if I stop my existing plan premium i.e. Rs.1500/- per month and pay Rs. 500/- more i.e. Rs. 2,000/- in total, then in which manner I should utilized this Rs. 2000/- for term plan and for some saving. Plz guide me.
Regards
Sumit Kumar
Dear Sumit,
You may a term plan from a company of your choice and based on your affordability (premium rate).
Kindly calculate the premium that is applicable for the selected term plan and the savings (if any) can be directed to mutual funds or any other suitable investment avenues for your other financial goals.
thanks Sreekanth for your valuable time.
I decided to buy a term plan for an amount of Rs. 30 Lacs for 30 years tenure from LIC that too off line because of its claim settlement ratio. Is my decision is correct as per my liabilities?
If I got the term plan from LIC then is it possible or advisable to get another term plan from private company like MaxLife for an amount of 15 or 20 lacs as the premium of said company is very low. Or should I can take some another step.
Dear Sumit,
Offline or Online - regarding claim settlement- does not really matter.
You can buy multiple term plans, there is no restriction (subject to acceptance of your proposals by the insurance companies).
Hello Srikanth,
Thanks for your valuable time in sharing the knowledge. I want a better future with proper financial planning and need your suggestions on it.
My age: 30, Single(will get married in a year), parents are not dependent on me (but I wish to take care of them in future)
Residing country: Singapore (Planning to come back in 1-2 yrs and settle down in Hyderabad
Heath status is good, non smoker & non drinker
Health insurance: Yes. 3Lakhs (provided by my Employer) + 2L top-up by me and no other health coverage
Goal: Own a 3BHK house[40-50L] & car in hyderabad and settle down
Planning Monthly investment: 15-20K
Below are my current investments, FD, Insurance plans. Please let me know the best ways for investment and alterations needed from present investments. I'm open to take term & health insurance and to invest money in mutual funds/SIPs/Equities
Sal: 12L (in India if I come back)
Current Sal: 2.5L per mon (in SNG) can save 1L
Total FDs: 15L
RD: 10K in progress
Insurance policies:
1. Birla sunlife VISION plan, 30yrs, 20L sum assured(Guanrranteed survival benefit 35L), 30 Yrs, policy taken 5 yrs back, hospital rider 2L
2. LIC of India Jeevan mitra triple cover, 30yrs, 5L sum assured, policy taken 5yrs back
3. Exide life creating life child plan, 16yrs, 1.8L sum assured, policy taken 5yrs back
Need your valuable suggestions.. Thanks in advance.
Dear TS Kumar,
1 - Kindly consider buying a Personal Accident cover with Disability risk cover.
Read : Best Personal Accident insurance Plans.
2 - Let me know if your parents have adequate Health cover?
3 - If you believe that Parents will be dependent on your in near future and you are going to get married in next 1 year, suggest you to take Term insurance plan with basic cover.
Read: Best Term insurance plans.
4 - Has the FD been accumulated for Down payment - property purchase?
5 - I believe all three plans are 'unwanted ones' for you. Child plan??
Once you buy a term plan, you may discontinue all these policies and invest the saved premium for your long-term goals.
Read:
Traditional life insurance plan - a terrible investment option.
How to get rid off unwanted life insurance policies?
I am 42 years old, NRI, working in Oman. I have taken an online
term policy from Max Life insurance recently when I was in India
for my annual leave.
As I am pre-diabetic and taking oral medication, I have disclosed
my health factors sincerely in my proposal form. Even though
my medical examination results were normal, I have been asked
to pay an extra premium @ 50% based on my health declaration.
Now, I came to know that the Max Life Insurance company will
be merged with HDFC Life within an year and the policy will be
serviced by HDFC Life thereafter.
As you are aware, Max Life is having a CSR of 96.2% and the
claims pending for more than 3 months are only few with them.
Where as HDFC Life’s CSR is only 95% and they have more
than 250 claims pending with them for more than 3 months.
Based on the above facts only, many people decided to choose
Max Life as their preferred life insurance partner. However, more
than 75 lakhs policy holders of Max Life are now going to be taken
over by an insurance company with lower CSR.
In current market scenario, merger can happen between any
private insurers in India, in accordance with the regulations of
IRDA. But what will be the consequences to be faced by the
policy holders in such corporate consolidations.?
Can I expect to continue with the same kind of quality treatment
and policy contract after the merger of these companies.? Is there
any regulation by IRDA to protect the interest of policy holders in
such mergers.?
Expecting your valuable comments.
Dear Babu,
Kindly do not get worried. Even HDFC is a standard company and our Indian Insurance industry is a very well regulated one.
If one discloses all the required information in the proposal form honestly (life the way you have done), there is nothing to worry about claims being serviced. Also, kindly note that we do not have separate claim settlement data w.r.t Term insurance plans alone.
"As per the recent amendment to Section 45 of the Insurance Act, If your policy is 3 yrs old, no matter what happens, the life insurance company will not be able to deny the claims. So, your life insurance company has only 3 years in hand to reject the policy based on any mis-representation or mis-statement. Once 3 policy years are completed then the life insurance company has to settle the claims and can not reject them."
Hi Sreekanth,
I have a two policy 1.LIC Jeevan Chaya commencement from 2009 other is TATA AIA commencement on 2003 it's possible I can slender both the Policy if Possible please let me know and what is the steps I have to follow
Dear Suresh,
Kindly buy a term insurance plan (if required) and then discontinue these plans.
Read:
How to get rid off bad life insurance policies?
Best Term insurance plans.