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Claim Settlement Ratio

When buying a life insurance plan, one of the most important parameters to keep in mind is the insurer’s claim settlement ratio (CSR). The ratio can tell you how reliable the company is when it comes to paying out the claims of its customers. A higher CSR means better chances your claim will be paid on time.

Claim Settlement Ratio

What is the Claim Settlement Ratio?

It is a value calculated by dividing the number of claims settled by the total number of claims received by an insurance company in a specific period, usually a financial year. It is then multiplied by 100 to arrive at a percentage. It serves as an indicator of the insurer's efficiency and trustworthiness in processing and settling claims.

For instance, if an insurer receives 1,000 claims in a year and settles 980 of them, the CSR would be 98%. As a policyholder, it is important to know about this metric as gives an idea of the likelihood of your claims being approved and settled.

Why is the Claim Settlement Ratio Important?

The claim settlement ratio is important for several reasons:

Reliability

A high claim settlement ratio suggests that the insurer is reliable and honours the claims its policyholders raise.

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Financial Security

For policyholders and nominees, a high CSR ensures that the financial support promised by the policy is likely to be delivered when needed.

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Better Decision-Making

When selecting the right company for their life insurance plan, the policyholder can look at the CSR to make an informed choice. They can compare the performance of different insurers via their CSRs. Ideally, the company with the highest claim settlement ratio in life insurance should be considered a strong contender.

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Regulatory Compliance

Every life insurance company in India is required by the Insurance Regulatory and Development Authority of India (IRDAI) to provide its CSR each financial year. It helps the IRDAI to ensure that insurers maintain fair practices and that customers’ needs are being met.

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How do Retirement Calculators work?

How Is the Claim Settlement Ratio Calculated?

The claim settlement ratio is calculated using the following formula:

CSR = (Number of Claims Settled / Number of Claims Received) × 100
 

For example, let’s assume XYZ Life Insurance Company receives 1,000 claims in a year. Out of the 1000, it settles 975 claims. So, the CSR of the company for the year would be:
 

CSR = (975 / 1000) × 100 = 97.5%
 

A potential policyholder can look at this metric to decide whether XYZ Life Insurance Company is a good fit for them.

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Achieving excellence in claim settlement ratio.

98.22%

At IndiaFirst Life, our exceptional claim settlement ratio reflects our commitment to your financial security.

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What Is a Good Claim Settlement Ratio?

  • A good claim settlement ratio is, generally, considered to be 95% or above. If an insurer has a 95% CSR, it means they have settled 95 out of every 100 claims they received in the previous year
  • A high ratio means the insurer has shown a willingness to honour its policyholders’ claims without unnecessary delays or complications. To a certain extent, it also shows that the company has an efficient claim-raising and solving process, and a customer-friendly claims department. 
  • When you plan to buy life insurance, a consistently high claim settlement ratio over several years is a strong indicator of a good insurer. However, it should not be the sole deciding factor. You should also look for comprehensive coverage, customer service, choice of riders, and other important parameters before going ahead with a life insurance plan.
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Types of Insurance Claims

When it comes to life insurance, there are two main types of claims a policyholder or beneficiary may deal with:

Death Benefit Claims

These claims are made by the nominee or beneficiary when the policyholder passes away during the policy term. The insurance company pays the sum assured along with any applicable bonuses, given that all policy conditions are met, and the required documents are submitted. This type of claim is essential for providing financial support to the family after the loss of the insured person.

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Maturity Claims

Maturity claims arise when the policyholder survives the entire term of the policy. In this case, the insurer pays the sum assured along with any bonuses or benefits promised at maturity. The policyholder must submit a maturity claim form and other documents to receive the payout.

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The claim settlement ratio of life insurance companies is based on these claims being resolved.

What Factors Affect the Claim Settlement Ratio?

Several things can affect how well and how often a life insurance company settles claims. These factors then impact the company’s overall claim settlement ratio.

 

 

Proper Documentation

If the required documents are missing or incorrect, the insurance company may delay or reject the claim. It is important to fill out forms with care and attach the required documents to ensure a smooth process on both ends.

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Unclear Policy Terms

Policies with complex terms may lead to misunderstandings. If the policy terms and conditions are difficult to understand, people may end up filing claims that do not meet the conditions, which can lead to rejections.

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Fake or Fraudulent Claims

When someone raises a claim, the company assesses it before going ahead. If the life insurance company finds that it is a fraudulent claim, it will reject the claim. A rise in such claims can lower the overall ratio.

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Efficiency in Claim Processing

Some companies have smooth and quick claim processes that can settle claims faster. This helps to process and settle more claims in a year, improving in the claim settlement ratio. 

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Policyholder’s Negligence

If the policyholder fails to comply with rules and regulations on their end, the insurer may be left with no choice but to deny the claim. If this occurs repeatedly, the claim settlement ratio of the insurer may be affected. 

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How Long Does It Take to Get the Claim Payout?

The time taken to receive a claim payout varies depending on the insurer and the complexity of the claim. However, insurers are, generally, required to settle claims within 15-30 days of receiving all necessary documents. There might be cases where additional investigations are needed. In such situations, you can expect delays in claim settlement, usually of around 45 days from the date of claim intimation. 

Why is IndiaFirst Life Claim Settlement Easy and Hassle-Free?

If you have a life insurance plan with IndiaFirst Life, you can rest assured of a smooth and easy claim settlement process. Let us explain why.

High CSR

IndiaFirst Life reported a claim settlement ratio of 98.22% in FY 2024-25. The high ratio indicates that we take the needs of our policyholders and their loved ones seriously and do our best to settle their claims.

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Multiple Ways to Register Claims

IndiaFirst Life allows you to register your claims via multiple channels. You can raise a claim online, via email, or through a toll-free number. You can also visit a branch or drop off a courier. We will register the claim as soon as we get the intimation and the documents.

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Dedicated Customer Support

We have a dedicated customer support team to help policyholders and beneficiaries through the claims process.

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Prompt and Clear Communication

IndiaFirst Life understands the importance of reassurance and clarity in difficult times. We provide regular updates on your claim status and other details to ensure you have a hassle-free experience. 

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Availability of Important Information

We have a repository of all claims-related information on our website. You can easily access claim forms, product information (including that of withdrawn products), and more under the ‘Claims’ option on our main menu.

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These features ensure that IndiaFirst Life’s policyholders have a smooth claim settlement process and that they get the support they need when they need it.

How To Initiate a Life Insurance Claim with IndiaFirst Life?

To initiate a life insurance claim with IndiaFirst Life, follow these steps:

Register Claim

Start by registering the claim online on our website, via email at claims.support@indiafirstlife.com, or by calling 1800-209-8700.

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Submit Documents

Next, gather and submit the hard or soft copies of the required documents, including the claim form, death certificate, policy documents, and identity proofs.

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Assessing Your Claim

The insurer will review the submitted documents and may conduct additional investigations if necessary. You will be notified in case of additional requirements and be updated with the claim status at every stage. 

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Upon verification, you will receive communication about the claim. If approved, the claim amount will be disbursed to the beneficiary's account.

 

Timeline for the claim settlement process with IndiaFirst Life (as per guidelines set by the IRDAI):

  • If no investigation is needed, the claim will be approved or rejected within 15 days of receiving the claim.

  • If an investigation is needed, the claim will be approved or rejected within 45 days of receiving the claim.

Documents Required for Claim Settlement

You will need the following documents for life insurance claim settlement:

  • Claim form, duly filled and signed by the claimant.

  • Death certificate, issued by the local municipal authority.

  • Original policy document

  • Identity proof of the claimant (and the deceased, in some cases)

  • Address proof of the claimant.

  • Bank details (such as a cancelled cheque or bank passbook copy with details for fund transfer)

  • Medical records, if death has occurred due to illness.

  • First Information Report, post-mortem report, and a police inquest, in case of accidental or unnatural death.

  • Diagnostic reports and medical records, in case of a critical illness claim

Additional documents might be required, depending on the type and complexity of the claim. For instance, the death benefit claim documentation for a term plan can differ from that of a maturity benefit claim in an endowment plan.  

By providing the above documents at the earliest, you can ensure a faster and smoother claim process.

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Common Reasons Why Life Insurance Claims Get Rejected

Even if a company has a high claim settlement ratio, it may reject a claim for many reasons. Some common ones include:  

 

Non-Disclosure of Relevant Information

Failing to share important details, such as pre-existing medical conditions, lifestyle habits (e.g., smoking), or past illnesses, can lead to claim rejection. Always provide full and honest disclosures when applying for a life insurance plan.

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Fake Claims

Raising a fake claim by submitting false documents or misrepresenting facts is considered fraud. If someone submits false documents or lies while making a claim, the insurer will investigate and may reject it. Fake claims can not only lead to rejection but also affect the company’s claim settlement ratio.

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Premiums Not Paid on Time

If you miss premium payments and do not renew your policy within the grace period, the policy may lapse. It can mean that the coverage ends, and any future claim will most likely be rejected. Always pay the life insurance premium on time or choose autopay to avoid this. You can also use a life insurance calculator to get an estimate of the premium beforehand, so that you can choose a more affordable plan.

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Incorrect or Outdated Nominee Details

Claims can be delayed or disputed if the nominee details are incorrect or outdated. Always review and update nominee details, especially after major life events such as marriage, childbirth, or moving to a new location.

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Incomplete Documentation

If the required claim documents are not submitted on time, there may be delays in settling the claim. In some cases, it may lead to the claim being rejected. Hence, be aware of the claim documentation requirements and have them handy. Make sure your loved ones are also aware of them in case an unexpected situation comes knocking. 

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Claim Outside Policy Terms

If the claim is being raised for something the policy does not cover (such as death by suicide within the first year), there is a high chance it will be denied. For instance, raising a maturity benefit claim when you have a term plan may not be plausible. Read your policy with care to understand what is and is not covered.

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How to Select a Company in India with the Best Claim Settlement Ratio?

Here are some tips to help you choose a company with a good claim record:

Rely on IRDAI

Every year, IRDAI requires all insurers to publish their claim settlement ratio. As these ratios are verified by IRDAI, they are reliable. A company with a ratio of 95% or more is usually a safe choice.

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Look at the Claim Volume

Go beyond the ratio metric. See how many total claims the company has settled. A high ratio is more trustworthy when it comes from handling a large number of claims, not just a few.

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Check the Claim Settlement Time

Look for a company that not only settles its claims but also does it quickly. Research the market for insurers that are known for fast and smooth claim handling.

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Read Customer Reviews

Read what other customers say about their experience, especially around claim settlements. A higher share of positive reviews can mean better service.

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Make Sure the Company is Stable

Choose a company with strong financial backing. This means they are more likely to pay out claims without delays. You can check the company’s annual report to get clarity on its financial standing.

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Be Clear on the Policy Terms

Pick a company that clearly explains its terms. The policy should be easy to understand, and the claim process should be simple. Otherwise, you may be lost in the muddle of terms and conditions.

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By following these steps, you can choose a life insurance company in India that your family can truly depend on.

The claim settlement ratio is an important indicator of how reliable an insurer is. A high CSR ensures that your beneficiaries receive the policy benefits without major complications. When you buy life insurance for your family’s future, it is essential to consider the claim settlement ratio alongside other factors such as claim settlement time, customer feedback, and financial stability. Making an informed choice today can provide peace of mind for you and financial security for your loved ones tomorrow.

FAQs

Why is it essential to submit all the records/documents as required by the company?

Answer

Submitting all required documents helps in ensuring a smooth and timely claim settlement process. If you submit incomplete or incorrect documentation, it can lead to delays or even rejection of the claim. The right documentation and information help the insurer verify the claim faster, which means your beneficiaries receive the benefits without major hurdles.

What is the time frame within which the claim must be reported to the company?

Answer

It is advisable to report a claim as soon as possible, ideally within a few days of the insured's demise. If the claimant reports the claim on time, the insurer can process the claim on time, which will lead to the beneficiaries receiving the benefits early. 

Delays in reporting can lead to undue complications. In some cases, additional documents may also be required, which can delay the settlement process even further.

Why is proper disclosure critical for a better claim settlement ratio?

Answer

Providing accurate and complete information at the time of buying a life insurance policy is essential, as it allows the insurer to gauge the risk they are taking on. In case of inaccurate or incomplete data, the insurer may be faced with complications when a claim is raised based on this information. 

If important personal details, such as medical history or lifestyle habits such as smoking, are not disclosed at the start, it may cause the insurer to reject or dispute a claim. It affects not just the policyholder and their loved ones, but also the insurer’s claim settlement ratio in the long run.

When does the insurer decline a claim?

Answer

Insurers may decline a claim for many reasons, such as: 

  • Non-disclosure of critical information

  • Submission of false documents

  • Lapse of the policy due to unpaid premiums

  • Claim falling outside the policy's coverage terms, and more.  

Hence, it is important to pay premiums on time and be truthful with the insurer, in addition to being aware of the policy’s T&C. It not only allows you to continue enjoying the benefits of the life insurance plan but also leads to a higher likelihood of your claims being approved.

What makes the claim settlement ratio important?

Answer

The claim settlement ratio shows how trustworthy an insurance company is at paying claims. A high ratio means the company has a strong history of paying claims on time. It gives peace of mind to the policyholder and their loved ones. 

When choosing a life insurance company, you must consider the claim settlement ratio as an important parameter, as it affects how quickly and easily your loved ones will get the benefits they deserve. It can also be beneficial for you, as a policyholder, if and when you have to raise a maturity claim to receive your accumulated benefits.

What is the meaning of term insurance claim settlement ratio?

Answer

The term insurance plan claim settlement ratio refers to the percentage of term insurance claims an insurer has settled against the total claims received in a financial year. It reflects the insurer’s efficiency in handling term claims raised by its policyholder. 

However, you must note that companies usually do not have a separate claim metric for different types of life insurance policies. The claim records for several types of policies, such as a money-back policy or an endowment plan, are reflected in a single metric, which is generally called the life insurance claim settlement ratio.

What is the formula for the claims ratio?

Answer

The claim settlement ratio is calculated using the formula:

(Total Claims Settled / Total Claims Received) × 100

For example, if an insurer received 1,000 claims in a year and settled 980 of them, the claim settlement ratio would be:

(980 / 1,000) × 100 = 98%. 

While the claim settlement ratio is a good indicator of the company’s reliability, it should not be the sole deciding factor. The ratio may be affected by several factors outside the insurer’s control. Hence, it is important to get a complete picture before proceeding.

How do you check the claim settlement ratio?

Answer

You can check an insurer’s claim settlement ratio in the annual report shared by the Insurance Regulatory and Development Authority of India (IRDAI). The reports are published on IRDAI’s official website and show how many claims each company has settled. You can also find this information on the company’s website, updated for the previous financial year, before you buy life insurance online. Checking the ratio helps you choose a company that has a good record of paying claims, which is important for your family’s future security.

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