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Life Insurance: 5 Steps To Choosing The Right Insurer Research Team | Posted On Wednesday, July 04,2018, 06:33 PM

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Life Insurance: 5 Steps To Choosing The Right Insurer




Life insurance penetration in India:


According to the Economic Survey 2018, India’s life insurance penetration increased from 2.71% (2001) to 3.49% in (2016-17). This makes it clear that we are underinsured to a large extent.

The reasons for low penetration of life insurance may be many. Some citizens think life insurance is only for the elderly. Some think it not necessary, as they have health insurance. Others simply cannot afford it. Whatever be the reason, it is high time for you to avail life insurance. It is more a necessity than a luxury.

Want to know more on term life insurance plans? We at will make it easy for you. Just give us a missed call on 022 6181 6111 to explore our unique Free Advisory Service. is not a seller of any financial products. We only provide FREE financial advice/education to ensure that you are not misguided while buying any kind of financial products.


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Life Insurance: 5 Steps To Choosing The Right Insurer


Why should you get a life insurance plan?


Having a life insurance plan protects an insured’s family in dire financial situations. Depending on the policy you sign up for, the life insurance plan gives both, survival and death benefits. Other than this, premiums on life insurance policies are eligible for tax deductions. Therefore, life insurance gives the dual benefits of mortality cover and tax benefits.


Steps to choosing the right life insurer:


Now, that you are thinking of availing a life insurance for yourself and family, take a look at certain steps to choose the right insurer.


1. Claim settlement ratio:


It is good to buy a life insurance plan from an insurer who has a high claim settlement ratio. When it comes to claiming settlement ratio, be sure to check on early claims and non-early claims data.


2. Early claims:


Early claims arise on the death of the insured, within three years of taking the policies. Non-early claims are settled only on receipt of the death certificate and a simple claim form.

IRDA has instructed life insurers to settle non-early claims, which stand at 20%, within 15 days. Early claims on the other hand, stand at 80% and have to be settled within 90 days.

Early claims require investigation before settlement. Therefore, more time is needed in settling such claims. These claims should be settled in a month’s time and shouldn’t be kept pending after 3 months.


2. Lapse ratio:


Lapse ratio indicates terminated policies due to a failure of premium payments. If policies have lapsed before enough premium payments are recovered from the insured, the insurer will not be in a position to cover early policy expenses. A life insurer with lower lapse ratio should be considered. The reason is very simple, as a higher lapse ratio indicates mis-selling of policies and poor servicing of the insurers.


3. The average productivity of the agent:


The average productivity of an agent is the number of policies sold in a year. Studies show that on an average, an LIC agent sells 18 policies in a year, while other insurers sell less than 5 policies. This indicates that many agents work either part-time or quit quickly.

Life insurers have a largely untapped market. Selling the right products to right people and retaining the customers will help insurers penetrate further.


SEE ALSO: 5 Reasons To Buy A Life Insurance


4. Service quality:


Service quality of an insurer is of utmost importance. It shows the attitude of an insurer towards customers. Do they answer your queries? Are they patient? Do they make an effort to understand your financial needs? Ask these questions before you make a final choice.


5. Customer reviews:


You can evaluate an insurer based on customer reviews. You may also go through their websites, blogs, press releases, news, and so on, before making a final choice.

You can also take a look at complaints that an insurer may have. Not all complaints may be genuine, but it is always worth having a check on them.

Given a plethora of insurers to choose from, selecting the best ones is always a challenge. It is good to consult friends who have a fair amount of financial knowledge.


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