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Consider claims ratio of insurer before buying a policy

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THERE are several points that need to be considered and analysed while selecting an insurance policy.

This would mean that there are a lot of considerations that go into the entire decision-making process as far as the selection of the insurance company and policy are concerned. But, what should also become a part of the decision-making process is the manner in which the claims are paid or handled, and, hence, this is something that needs the attention of anyone who is buying insurance.

Unless, this is done, there could be a situation where the entire effort of buying a policy is wasted if the claims experience is not sound.

Claims Ratio: One of the ways by which an investor is able to track the entire process is by looking at the data that is available for various insurance companies.

Among the statistics that are released by the insurance regulator, the Insurance Regulatory and Development Authority (Irda), there is information that covers the claims paid or the claims settlement ratio.

This ratio is nothing but the percentage of claims that are actually paid by an insurance company, once they are received from policyholders. So, a claims settlement ratio of 90 would indicate that the company has paid 90 claims out of every 100 claims received.

While a higher claims ratio is a good thing for the policyholder, there are several other factors that need the attention of the investor so that he analyses the right information. Understanding the policy: A reason why there are often some problems with respect to a claim settlement is due to the fact that the policyholder has a misunderstanding of the policy details. Usually, there has to be a complete reading of the features of the policy, and, then, these needs to be acted upon so that there is a proper way in which the entire situation is handled. In reality however, there is not much interest that is actually shown when a policy is taken and the policy document is just kept aside. Action is often taken based on the understanding of the policyholder, which might not have been verified with the actual details of the policy. This could mean that it could be too late to do anything about it and the claims are likely to be rejected.

Traditional policies: A significant factor that also needs attention is the type of policies that are available.

Take traditional policies for example, where there is more of a savings element involved, and in such a case, the completion of the necessary time period of the policy will lead to a position where the amount is likely to be settled. This also might reduce the scope of disputes because there is a payout on the policy that does not need much attention of adhering to some technical conditions.

On the other hand, there are chances that death claims could come under a detailed scrutiny, and, here, the scope of the disputes could be higher.

Exclusions: The exclusions that actually figure in the policy are some of the key elements that need consideration because these could be the main reason why the policy payment might not be paid. So, there are conditions like suicide within a specified time period of taking the policy that is not covered or death due to specified pre-existing conditions that are not covered for a specific time. Another reason why a lot of claims are rejected is due to the fact that the required information that needs to be provided at the time of taking the policy is not provided or some of the information is actually held back or wrongly provided, and in such a situation, the individual will find that the chances of the claims being rejected are quite high.

 

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