Factors You Should Look for When Buying a Life Insurance

Aug 28, 2018 | 1 year ago | Read Time: 3 minutes | By iKnowledge Team

Gone are the days, when you manually filled a proposal form to buy a life insurance policy. Today the process is easy, fast and flexible. You can buy a policy directly from a smartphone or a laptop. However, you need to sift what you see and what you read before settling on an insurer.

Here are a few details you must check:

Claim settlement ratio

While looking for a term insurance policy, one of the major points to consider is claim settlement ratio. A claim is settled by paying the sum assured to the nominee in the event of the policyholder’s death. Claim settlement ratio is the number of insurance claims settled by the insurer in a year, the higher the ratio the better the chance of claim settlement.

Claim Settlement Ratio = (Total Claims Approved and Paid) / (Total Claims Received By The Insurer) *100

For example, Aegon Life has a claim settlement ratio of 96.45%. This means that Aegon Life has settled 96 out of 100 claims it has received.

Age coverage

When you zero in on an insurance plan, you must also understand how your premium will be decided. One of the main factors that play a major role in setting your premium is your age. Hence, the earlier you buy an insurance plan, the more beneficial it is for you in the long run. Most insurers specify the upper age limit for a policy coverage. A life insurance policy covers the risk associated with the policyholder’s life only until the upper age limit. Look into this information while purchasing the policy. For example, Aegon Life provides policy coverage until 80 years of age.

Premium

Another important factor is the premium amount that depends on the claim settlement ratio of the insurer, subscriber’s age, and sum assured under the policy. Compare premiums by different insurers for a particular sum assured to avail the best quote.

Charges

Because there are various risk factors associated with an insurance policy, a life insurer may levy additional charges depending on the product. For example, a fund management charge could be levied on a life insurance product like a Unit Linked Insurance Plan (ULIP). The charge is used to manage the funds under the ULIP. Look into various charges levied by different insurers on a product before purchasing a life insurance policy. These charges can be written either in fine print or in a separate ‘Fees and Charges’ section. Some charges are a one-time payout but some need to be paid throughout the policy’s tenure.

Size

When it comes to life insurance, the size is determined by the annual premium collected by the company. You can look into this financial information published by insurers on their website. This will give you an idea of the insurer’s financial capability in terms of claim servicing. 

You must also check the insurer’s history and business presence to get a fair idea on the insurer’s credibility. For example, Aegon Life has been operating in the insurance space for nearly 173 years. Its presence is spread across 20 countries in America, Europe, and Asia.

Customer service

An insurer must have an efficient customer care team to handle all queries. Look into the quality of customer service from comparison sites. A grievance resolution team is necessary to handle all complaints associated with claims, and policy issuing processes. This is mandatory as per the guidelines laid by the regulator Insurance Regulatory Development Authority of India (IRDAI). Some insurers offer a dedicated number to handle complaints raised by policy subscribers.

Conclusion

A life cover should be purchased only after verifying important information about the insurer, such as the claim settlement ratio.Other factors could include age coverage, customer service, and fees.  Ensure all the criteria are met before buying the right life insurance policy.

Advt. no.: II/Aug 2018/4337


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