How to Choose the Right Life Insurance Company?

Right Life Insurance Company

The fundamental step when buying any insurance plan is choosing the right insurance company. With so many insurance companies offering stellar deals, it can often become confusing to pick the right one. Hence, it is essential to know how to choose the right insurance company when buying policies. In this post, we have mentioned some key tips to choose the best life insurance company.

Most people look at factors such as the type of insurance offered, the coverage, or the benefits provided before buying a life insurance plan. While you must consider these factors, one key criterion is the company you choose for buying an insurance policy. Insurers often experience financial loss because of choosing the wrong insurance company that did not deliver at the time of need. For purchasing something as important as a life insurance policy, choosing the right company is key to ensuring complete peace of mind for yourself and your loved ones for years to come.

So, here are some useful tips to help you pick the right insurance company

1. Check the Legal Accreditation of the Company

In India, the insurance sector is regulated by the IRDA (Insurance Regulatory Development Authority). Currently, there are 24 recognized life insurers as per IRDA. Choosing from one of these assures that the company will comply with the regulatory body’s rules, policies, and guidelines. Hence, minimizing the chance of potential fraud and exploitation. 

2. Check out the Financial Stability of the Company

There had been multiple cases where insurance companies failed, and people lost their money. To avoid such situations, it is imperative to investigate the company’s financial stability before buying any insurance plan. It can be done by studying a company’s-

  • Financial Statements: A company’s paying ability can be measured by its financial strength ratings, which are generally posted on its website or can be found through other reliable online sites. You can also get a copy of the company’s financial statement and check out its growth rate.
  • Solvency Ratio: Solvency ratio is another important metric to evaluate a company’s financial stability. It indicates a company’s ability to honour the policies and other liabilities from its assets and the cash flows. While the IRDA mandates all insurance companies to maintain a solvency ratio of at least 150%, most good companies maintain a much higher ratio. 

A company with strong financial stability is less likely to falter on its liabilities and payments.

3. Lower Lapse Ratio and High Claim Settlement Ratio

The lapse ratio identifies the policies which are terminated because of unpaid premiums. A company with a high lapse ratio indicates that policyholders are not happy with the insurance plan or the renewal system. Hence, customers should choose an insurance company with a lower lapse ratio.

Along with a lower lapse ratio, it is equally or even more important to select a company with a high Claim Settlement Ratio (CSR). CSR is the percentage of total claims settled by the insurer against the claims made. A good CSR indicates the ease of settling the claims with the company.

4. Choose a Company where you can Buy Online 

Buying life insurance online will save a lot of your time, is convenient, and requires minimal paperwork as well. Moreover, purchasing policies online helps insurance companies reduce the costs associated with intermediaries, the benefit of which is passed to the insured. Lastly, online application is easy, and the process is transparent. Once you have applied, you can easily check the status of your application through the customer portal.

5. Check Customer Service and Testimonials 

A customer review is another key reliability parameter. It ensures how reliable the company is and reflects upon its customer relationship status. Check the testimonial section on the company’s website and check other online reviews and rating portals. It will reveal customers’ experiences with the company and help you make a better decision.

Don’t buy any insurance plan in haste. Take your time and research well. Check the company’s affordability, financial stability, and consumer ratings before buying any policy. It is important to ensure the company provides services that will help you build your financial safety net.