When purchasing insurance, many individuals often focus on one metric — the claim settlement ratio (CSR). While CSR is an important indicator, experts say it should not be the only factor guiding your decision. Understanding the policy details, the insurer’s financial health, and customer experience can make a significant difference in your long-term financial security.
Policy coverage and sum assured
Rakesh Goyal, Director at Probus, emphasises that “apart from the claim settlement ratio, there are a couple of other important factors that a policy seeker must take into consideration while buying insurance. One must check the sum insured amount, as it should be sufficient to handle the insured’s financial requirements if a claim is needed. Secondly, the policy coverage should be well checked in advance to know what is covered and what is not.”
He advises reviewing exclusions, optional add-ons or riders, waiting periods for pre-existing conditions, and nearby network hospitals or garages for health and motor insurance, respectively.
“Ensure that the premium fits your budget not just for today but in the long term,” Goyal adds.
Evaluating the insurance company
Anup Seth, Chief Distribution Officer at Edelweiss Life Insurance, says, “When most people start looking for life insurance, they are tempted to focus on the premium. But it’s far more than a financial transaction; it’s a long-term relationship that could one day be your family’s financial lifeline.”
He recommends checking the financial strength of the insurer by reviewing assets under management (AUM) and historic returns for savings-oriented and investment-linked plans.
For instance, in guaranteed return plans, it’s important to compare promised returns with actual net returns after taxes, while participating plans require reviewing past bonus declarations.
For ULIPs (Unit Linked Insurance Plans), investors should examine IRR or XIRR over multiple years and account for hidden charges like fund management fees and mortality charges.
Customer experience and transparency
Seth also highlights that CSR alone does not reflect customer experience.
“In tough times, months of waiting for a claim can add to your family’s stress. Check net promoter scores, independent reviews, grievance redressal mechanisms, and the company’s responsiveness during actual interactions,”he said.
He adds that features like online policy issuance, digital documentation, and smooth claim processes are key indicators of a customer-centric insurer.
Coverage should match real needs
Insurance experts urge buyers to calculate coverage based on debts, annual income, mortgage, and future expenses such as children’s education. This ensures that the sum assured adequately supports your family if required.
Understanding grace periods, free-look options, exclusions, waiting periods, surrender charges, and nomination rules is equally critical.
