Why is looking at a life insurance company’s claims settlement ratio important? MintGenie explains

livemint.com:

life insurance offers important financial security, the expeditious and efficient resolution of claims holds significant importance when selecting a policy. Ensuring confidence that your family will promptly and seamlessly receive the assured payout in challenging circumstances is vital. When searching for a life insurance plan, the pivotal question revolves around the speed and efficiency with which your loved ones receive the payout in the event of a claim.

This becomes apparent when examining the claim settlement ratios of different life insurance companies, with some showcasing exceptionally high ratios. This emphasizes both their commitment and capability to resolve claims raised by policyholders or their families. For those unfamiliar, the claim settlement ratio of a life insurance company, presented as a percentage, represents the proportion of claims settled by the insurance company about the total number of claims received.

A higher ratio typically reflects a more commendable track record in efficiently managing claims. This formula essentially denotes the percentage of claims that an insurance company effectively addresses within a specified period, usually spanning a year. Analysing the formula in two distinct components can assist the policyholder in understanding the meaning, implications, and significance of this ratio when purchasing a life insurance policy.