Criteria For Selecting Life Insurance

When you set out to buy a new vehicle, you'll choose a make and model that fits both your needs and budget. For instance, if you are a family of 4 and want good trunk space, you’ll choose a sedan. Furthermore, you'll verify whether the after-sales service is effective to ensure that any issues you may encounter in the future are dealt with properly.

Similarly, when it comes to life insurance policies, you need to keep certain factors in mind before you shell out your hard-earned money. Why?

The insurance market is filled with enticing policies offered by renowned providers, but not every policy will suit your requirements. If you wish to get the most out of your investment, make sure the policy you are considering meets your needs and specific criteria.

Now, the question of the hour is - What are the basic criteria to consider while purchasing a life insurance policy?

Let’s find out!

Criteria For Selecting Life Insurance Premium That Fit Your Budget While Ensuring Adequate Coverage

One of the most important aspects of life insurance is the premium - a stipulated amount you need to pay to maintain the policy. It is the payment you make to the life insurance company to ensure you and your nominee receive payouts at the appropriate time - a maturity benefit (when the policy matures) or a death benefit (in case you pass away during the policy tenure). If you fail to pay your premiums on time, your policy will lapse and you will lose out on the benefits.

The premium amount is directly proportional to the amount of coverage you receive. Generally, plans with higher premiums have higher coverage, and vice versa.

So, when you decide to purchase the policy, you should consider whether the premium fits your budget and if the coverage is adequate.

A Good Claim Settlement Ratio (CSR)

The claim settlement ratio is calculated as the number of claims settled by the insurer divided by the number of claims received in a particular financial year.

Claim Settlement Ratio = Number of claims settled/Number of claims received X 100

A high CSR shows that a greater number of claims are being settled by the insurance company. So, the higher the CSR, the better the insurer.

Did you know ABSLI has a CSR of 98.08% - as per Financial Year 2021-22? The number speaks for us.

If you choose an insurer with a low premium but a poor claim settlement ratio, there is a high chance of the claim getting rejected in the future. It is, therefore, very important to ensure that the insurer you choose has a good claim settlement ratio.

The Insurance Regulatory and Development Authority of India (IRDAI) website provides information about claim settlement ratios for all insurers in India. You can review the list, compare the insurers with their respective CSRs, and then, choose the right one for you.

Responsive And Effective Customer Service

Nowadays, most life insurance policies are purchased online without the involvement of a broker or an agent. Right from applying for the policy to issuing the policy, everything happens online. So, it is important to make sure that the insurance company provides good customer service. If any issues arise during the policy tenure, you should be able to get in touch with the insurer at any time to resolve them. Hence, ensure the insurer's after-sales service is top-notch. This can be done by checking the reviews of previous customers to get an overall picture of the service provided by the insurer.

Riders Available With The Plan

Riders are add-ons you can choose with your life insurance plan at a certain extra cost. By adding these add-ons to your base policy, you can enhance its coverage. For example, the critical illness rider shall offer you an additional payout if you are diagnosed with a critical illness that is listed in the policy document.

Some of the common life insurance riders include -

• Hospital care rider
• Surgical care rider
• Waiver of premium rider
• Waiver of premium due to critical illness rider
• Waiver of premium due to disability rider
• Critical illness rider
• Accidental death benefit rider
• Accidental disability rider, etc.

If you are considering buying a policy from a particular insurer, make sure to check which rider options they offer and whether the rider you want is available with them or not.

T&Cs Attached With The Plan

The terms and conditions of life insurance policies vary across insurance providers. One insurance company may consider you a non-smoker if you haven't smoked for three years, whereas the other may require you to stop smoking for five years before they consider you a non-smoker. Therefore, it's crucial to find an insurer that offers you the most reasonable terms and conditions and fewer exclusions to ensure a seamless insurance journey. And, make sure you read the terms and conditions of the policy thoroughly - so as to avoid any unpleasant surprises in the future.

Summing Up!

Life insurance is an investment that should be made wisely, as it is a long commitment. The wrong investment can cost you a lot while the right one can secure the financial future of your loved ones. Now that you are aware of the key factors to keep in mind, we’re sure you’ll choose the right policy which safeguards your family's future in the most efficient way.