5 Factors To Look Into A Company Before Buying An Insurance Policy


Buying a life insurance policy can take a significant amount of homework and research on your part. And why not? After all, a life insurance policy is a long-term investment for your family’s financial well-being and security in case of any unforeseen and unfortunate event. Hence, you should look at the various types of plans available, along with chalking out your family’s future goals, calculating the life coverage you require, the premium amount you can afford, and so on. Let’s say you find the perfect plan for your needs, with the right features and benefits. Is that it? Should you go ahead and buy the life insurance policy? Well, not yet.

There is another aspect that many people neglect while investing in life insurance. This is nothing but a thorough examination of the insurance company. It is a crucial step in your journey to buy a life insurance plan. But how do you determine which insurer to go with? Here are some factors you should look for in a company before purchasing your life insurance policy

Main Parameters to Evaluate Insurance Companies

Before buying your life insurance policy, closely examine these crucial factors. 

  1. Claim Settlement Ratio- This is a crucial metric for assessing an insurance company. This talks about the percentage of claims settled by the insurance company in a certain period. It’s the ratio of the total number of claims settled against the total number of claims received to the insurance company in a financial year. You should choose an insurance company with the highest possible claim settlement ratio. A higher claim settlement ratio indicates that in the event of something unfortunate, your nominees will not find it overtly challenging to file claims and get them approved. Hence, this is the most important metric that you should be looking at seo agency preston 
  2. Incurred Claim Ratio– Incurred claim ratio is another parameter that you can also examine. It is the ratio of the net claims settled by an insurance company against the net premiums that it collected for a specific financial year. The incurred claim ratio helps you gauge the financial position of the insurance company. Industry experts always recommend choosing an insurer with a moderate incurred claim ratio. The IRDAI (Insurance Regulatory and Development Authority of India) publishes the incurred claim ratio of all health and general insurance companies on an annual basis. The calculation formula for the incurred claim ratio is the following- ICR (Incurred Claim Ratio) = Net Claims Settled/Net Premium Collected. For instance, if the insurance company collects a premium of Rs. 50 lakh and spends Rs. 20 lakh on claim settlements for a financial year, the incurred claim ratio will be 40%. 
  1. Grievance Count- You should also keep a closer eye on the number of grievances that have been raised by customers against the insurer. This is the biggest indicator of disputes between insurance companies and policyholders. You can examine this figure for a specific duration to get a better idea. 
  2. Solvency Ratio– Measuring the solvency ratio of an insurance company is the best way to get a picture of the organization’s financial health, along with its ability to fulfill its financial commitments in terms of meeting claims. The solvency ratio is the measurement of the scope of coverage of future payment commitments with the current assets of an entity and also its liabilities. The solvency ratio for an insurance company would naturally entail the size of its capital and assets in relation to the risks that it has taken on. Getting an idea of the insurer’s financial health is essential for any customer before investing in a life insurance policy. You can also check out ratings by independent rating agencies and other regulatory bodies. 
  3. Customer Satisfaction- Another great way to truly measure the performance of an insurance company is to find customer reviews. These may cover aspects like claim settlement, processing, customer support, plan features, and overall customer experiences. It goes without saying that you should avoid companies with a barrage of negative reviews. While no one company will have 100% positive reviews, go for an entity that is credible and has a good track record with an overwhelming number of positive reviews as compared to negative feedback. 

You can also scrutinize aspects like the range of life insurance and other products offered by the insurance company. This will give you more choices with regard to meeting your specific objectives. Compare the costs of coverage across different insurance companies as well. However, experts recommend that you should not skimp on insurance coverage amounts just to get the lowest possible premium obligations every month. 

Take your time before finalizing any insurance company. If required, you can also take professional guidance to make the best decision. Choosing a good insurance company is imperative for ensuring a smooth experience throughout the tenure of your policy, along with a hassle-free claim settlement process in the future. Going with a reputed brand name is always par for the course, although you should always set store by the parameters mentioned above. 

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