People’s financial security of their families is one of the most important priorities, and life insurance plays an important role in meeting this objective. When it comes to choosing life insurance, term insurance is one of the most plain and cheapest options to have. Nonetheless, a crucial aspect that you should keep in mind when you invest in a term insurance plan is the claim settlement ratio of the insurance company.

    What is a Term Insurance Plan?

    Term insurance plan is a simple form of life insurance that covers a particular period or what is often referred to as a ‘term’. If the policyholder dies during this term, the money is paid to the beneficiaries. In case the policyholder is alive at the end of the term, the policy matures with no cash benefits being paid out. These clear-cut definitions make term insurance an effective option to deliver significant coverage for a modest cost.

    Thus, the first position as to why one should buy term insurance is because the product is relatively cheap. Because term insurance only pays for the risk factor and does not contain any savings feature, the premiums are normally cheaper compared to other life insurance products. This cost-effectiveness enables policyholders to access and secure large amounts of coverage, affordably.

    Understanding Claim Settlement Ratio

    Claim settlement ratio is a significant factor that measures the extent to which an insurer pays claims in comparison to the total amount of received claims. For example, a claim settlement ratio of 95 per cent means that the insurer paid 95 claims out of every 100 claims that were received.

    A step-by-step guide to the procurement of term insurance

    1. Assess Your Needs

    Assess your financial situation and the needs of your dependents before purchasing it to meet your term insurance requirements. Here, one needs to take into account work experience, credit, personal needs, and dependence on resources for the family. This assessment can assist you in identifying the benefit amount and the policy duration that will suit you.

    2. Compare Policies

    As it has been mentioned above, there are distinct types of term insurance plans. Specifically, you should be able to compare different policies from different insurers through the coverage offered, policy premium, policy term, and optional extras such as critical illness rider or accidental death rider policy.

    3. Check the CSR

    When evaluating potential insurers, one should look into their ability to settle claims. They are stated in the insurance companies’ annual reports or can be obtained from the websites of regulating authorities. Go for those insurers who have high and consistent standardized claim ratios to ensure that in case any claim is to be lodged, there will not be any hitch.

    Advantages of Availing Term Insurance

    1. Money is associated with financial security for your family

    Term insurance is all about making arrangements for the monetary requirements of the family to be met in your absence. The proceeds are flexible, and they can come in handy to pay for house rent, children’s tuition fees, and other expenses to ensure your family’s lifestyle does not change significantly.

    2. Flexibility in Coverage

    Term insurance can be flexible on the choice of the term duration, and the cost of the insurance premium. It may be for 10 years, 20 years, or 30 years or a certain amount of coverage, term insurance can be specifically developed according to one’s financial profile.

    3. Peace of Mind

    This is comforting when a family knows they will have some amount of money saved even if something happens to any of the family’s breadwinners. This is because it frees up the necessary resources to deal with other aspects of life without having to determine the future down the line.

    The Significance of High Claim Settlement Ratios

    1. Assurance of Claim Pay-out

    A high CR ensures that your beneficiaries will receive the death benefit when it is needed. This is even more so in the emotionally straining situation where your loved ones must be provided for financially without the added process of going through all the paperwork that comes with applying for government assistance.

    2. Trust and Reliability

    In general, insurance companies and agents with high CR ratios are considered more reliable and trustworthy than their counterparts. This trust is important when making serious financial decisions like putting your money in term insurance.

    Rating Insurers beyond CSRs

    Customer Service Quality

    However, alongside the CSR, another equally significant factor must be taken into account and that is the quality of customer service provided by the insurer. Customer care and attention can also influence your experience regarding the purchase of policies and products as well as the disbursement of claims.

    Policy Terms and Conditions

    It is also important that one goes through the policy in detail to understand the policy terms and conditions. Be specific about exclusions, waiting periods, and other specifics that may explain why the claim cannot be honoured. This understanding will aid you in determining what to expect during the exercise of the actual claiming process.

    Most people have misconceptions about the term Insurance:

    1. Term Insurance is only for the Young

    As for term insurance, it is very cheap, thus, it is most popular among young people, but if an older person has certain financial liabilities or relatives who depend on him, term insurance is also suitable for him. It ensures that one can acquire the needed coverage at an affordable cost regardless of the age of an individual.

    2. There’s no value in Term Insurance if the Term expires

    Even though the policy ceases if you survive to the term’s end, the overall goal of term insurance is to afford coverage in critical financial years. If you still require coverage after the term, there are several ways you can go about it either renewing it or converting it to a permanent policy.


    It could be considered an appropriate measure to purchase term assurance to provide the family with a solid financial background. However, while comparing insurance policies, the insurance seeker must also look at the number of claims settled by the insurer. A high claim-settlement ratio is an index of honesty and efficiency, ensuring that the family is paid the necessary amount of compensation without much delay or extra hassles.