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5 Metrics to Consider While Evaluating Life Insurance Companies

25-August-2021 |

While having a life insurance policy for ourselves and our families is the need of the hour, it is important to choose a quality life insurance policy that serves your needs. The quality of the policy will, however, depend on the life insurance provider and their services.

 

According to sources, despite the insurance penetration and density in India showing an upward trend and life insurance companies collecting more than ₹5 trillion as gross premiums, the insurance penetration rate in India is still lower than the global average. While this means that the industry has much scope for growth, it also indicates that term insurance or life insurance buyers, in general, are not aware of how they should pick quality life insurance policies.

 

It is important to choose a good insurance provider if you are looking for insurance policies that provide the protection you are seeking and help you and your beneficiaries in times of need. Be it a policy term plan, a term plan with returns or any other type of life insurance policy, here are five metrics you can consider while evaluating a life insurance company so that you can avail of a life insurance plan of your choice without any hassles.

 

Given below are five important metrics that help you find a good life insurance provider:
 
  • The Persistency Ratio

    The persistency ratio of a life insurance company is proportional to the percentage of policyholders who renew their insurance policies with the company. As per the Insurance Regulatory and Development Authority of India (IRDAI), this ratio is measured and reviewed every 13, 25, 37 and 61 months and indicates the customers’ level of satisfaction with the insurance provider’s products and services. Therefore, a high persistency ratio is indicative of a good life insurance company and their offerings.

 

  • The Claim Settlement Ratio

    The claim settlement ratio of a life insurance company refers to the percentage of claims settled by the provider as against the total number of claims received during the year. This is among the most important parameters when it comes to evaluating a life insurance company since it means that the insurer is able to ensure timely settlement of claims when the policyholder or their beneficiaries are in need. Most insurance providers with a good claim settlement ratio enable a seamless process so that their customers can avail of the benefits without any delay.

    However, it is crucial to note that even the best life insurance companies in India with the highest claim settlement ratios are entitled to reject claims in case of incorrect and false information on the policy forms.

 

  • The ratio of incurred claims

    The incurred claims ratio or ICR stands for the life insurance provider’s ability to pay out or settle the claims. Though many may confuse ICR with the claim settlement ratio, the incurred claims ratio actually refers to the value of the claims settled out of the total amount collected in premiums. On the other hand, the claim settlement ratio is the number of claims settled by the company as against the number of claims filed for the year.


    If a life insurance provider has an ICR of 50-100%, it means that the company has been able to collect more money in premiums, thus indicating the company’s decent financial health. But more importantly, it shows that the insurance provider has been successful in offering good quality products and also helping their customers understand when filing a claim is necessary and when it isn’t.

 

  • The Solvency Ratio

    In simple words, the solvency ratio is the life insurance company’s ability to fulfil its long-term and short-term financial obligations. The solvency ratio is closely related to the financial health of the insurance provider. When buying term insurance for one’s family, this is one of the most important factors that a potential customer should look into.

    This is because a company with a low solvency ratio is likely to miss out on settling claims, debts and other financial commitments towards customers or otherwise. Customers believe in companies with a high solvency ratio as it assures them that their life insurance claims will be settled when the need arises.

 

  • The Customer Care

    It may not be completely possible to understand the customer service of a life insurance company before you buy a product from them. This is where research plays an important part. A lot of well-informed customers make it a point to get in touch with the customer care service at potential life insurance providers and ask questions to understand the initial impression of the customer service team.

    What makes the customer service team of any life insurance company so important is their ability to resolve the customer’s queries and issues without any delay. For first-time insurance buyers, the customer service team plays the role of a guide, helping the buyers choose the right products, understand complicated insurance terms and guiding them through the processes for buying a new insurance plan or filing a claim.

 

Conclusion
 

When it comes to buying a life insurance plan, getting your choice of plans and policies will largely depend on the life insurance provider.

 

Tata AIA Life Insurance is one of the life insurance providers in India. We offer insurance products across term insurance, savings solutions, wealth solutions and retirement solutions segments, along with attractive riders# to enhance your base coverage. We not only offer quality insurance products but also ensure that their customers are treated with care, and their queries are handled responsibly.

 

Most importantly, at Tata AIA Life, we always go the extra mile to provide the best to our customers. To know more, get in touch with us today!

 


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Tata AIA Life Insurance

A joint venture between Tata Sons Pvt. Ltd. and AIA Group Ltd. (AIA),  Tata AIA Life Insurance  is one of the leading life insurance providers in India. We post everything you need to know about life insurance, tax savings and a variety of lateral topics such as savings and investments in this space. You can access and read a host of different blogs, articles and pages at the Tata AIA Life Insurance Knowledge Center or get in touch with us with any queries or questions!

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Disclaimer
  • Insurance cover is available under the product.

  • The products are underwritten by Tata AIA Life Insurance Company Ltd.

  • The plans are not a guaranteed issuance plan, and it will be subject to Company’s underwriting and acceptance.

  • For more details on risk factors, terms and conditions please read sales brochure carefully before concluding a sale.

  • This blog is for information and illustrative purposes only and does not purport to any financial or investment services and do not offer or form part of any offer or recommendation. The information is not and should not be regarded as investment advice or as a recommendation regarding any particular security or course of action.

  • Please know the associated risks and the applicable charges, from your Insurance agent or the Intermediary or policy document issued by the insurance company.

  • Every effort is made to ensure that all information contained in this blog is accurate at the date of publication, however, the Tata AIA Life shall not have any liability for any damages of any kind (including but not limited to errors and omissions) whatsoever relating to this material.

  • #Riders are not mandatory and are available for a nominal extra cost. For more details on the benefits, premiums and exclusions under the riders please refer to the Rider Brochure or contact our Insurance Advisor or visit our nearest branch office