How to choose the right life insurance company: Six factors to consider


The Covid-19 outbreak has served as a stark reminder of the value of life insurance in difficult times. Business premiums increased by 16% year on year in the second half of 2020-21, with more customers opting for single-premium coverage (as a protection against future loss of income).

While it is encouraging that consumers are becoming more aware of the importance of acquiring life insurance plans, selecting the correct life insurance company is as critical.

Here are some things to think about while selecting a life insurance company:

Claim settlement ratio (CSR): The claim settlement ratio (CSR) is the percentage of claims settled by an insurance company compared to the total number of claims received each year. A high CSR indicates that settling claims with the firm is easier. The claim settlement ratio is given a lot of emphases when evaluating the customer friendliness of life insurers.

Consumers are looking for better life insurance policies, as well as customized solutions, following the pandemic. Payment flexibility, innovative products, and individualized solutions are all considered essential. Customers should review the companies’ product features, riders, coverages, and terms and conditions. Web aggregators can assist in making the best decision by providing a clear comparison of insurance policies.

Consumers are increasingly opting for online forms of purchasing and renewing life insurance, as the focus on social distancing and contactless transactions grow. Customers should prefer businesses that provide digitally equipped omnichannel systems and enhanced online capabilities.

Solvency margins: The reputation and financial strength of the insurance business’s promoters are critical in determining whether the company can responsibly manage the policyholder’s funds and meet its obligations. The solvency margin should be known to comprehend the insurer’s financial strength. The ability of a corporation to satisfy its debt obligations, claims responsibilities, and other financial commitments are measured by its solvency margin.

The higher the solvency margin, the better the insurance companies ability to settle claims. Insurers must maintain a minimum solvency margin of 150 percent, according to the IRDAI. Each company’s solvency margin is reported in the IRDAI annual report, and comparisons can be made on this basis.

The professionalism of the agent or front-line sales team speaks volumes about the company. It matters whether the agent attentively listens to and understands the customer’s wants or is preoccupied with making a sales pitch without regard for the customer’s financial needs. Only if one is satisfied with the sales staff’s services during the initial meetings should a final decision be made.

Ratings and evaluations of insurance companies can be quite useful in determining which insurer is best for you. Although some of it may be fraudulent or generated by competition, a flurry of identical complaints directed at a company should not be dismissed because it serves as a gauge of consumer happiness.

As a buyer, you should resist pressure from insurers or government officials and instead focus on purchasing the right product from the right provider based on your needs.

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