Life insurance is an agreement between the policyholder (insured) and the insurance company (insurer), where the insurer agrees to pay the sum assured of the policy when the insured dies as per the conditions mentioned in the policy document.

The sum assured of the policy is also called as death benefits. The insured pays periodic premiums to keep the policy active. The insured will nominate a beneficiary to receive the proceeds of the life insurance policy.

1.Why is Life Insurance Important?

The modern world is full of uncertainties. By keeping the interest of your dependents in mind, it’s only wise to avail life insurance to secure their future financially. You can provide for your family even when you are not around.

2.Who can be the Beneficiary?

At the time of signing your policy document, you need to nominate the beneficiary(s). You are allowed to nominate more than one beneficiaries by specifying their shares from your life insurance policy. Generally, blood relatives and spouse are chosen as beneficiaries. However, you are allowed to nominate friends by specifying reasons, to avoid conflicts with the legal heirs.

3.Who can Claim Life Insurance Policy?

Only the beneficiaries are allowed to claim the proceeds of a life insurance policy. Even though you are a legal heir and you are not designated as a beneficiary, then you cannot claim the proceeds of the policy.

4.What is Claim Settlement Ratio?

The claim settlement ratio of an insurer is the number of claims settled against the number of claims filed: higher the ratio, better the insurer. When choosing the insurer, you must check the claim settlement ratio. What is the point of availing life insurance if your insurer rejects the beneficiary’s policy claim? Hence, you need to ensure that your insurer has a good claim settlement ratio.

5.IRDAI Report on Insurers’ Claim Settlement Ratio

The insurance watchdog Insurance Regulatory and Development Authority (IRDAI) releases the claim settlement ratio of all life insurers every year. You should mandatorily check this data before deciding on the insurer. The following table shows the claim settlement ratio of life insurers for the FY 2017-18:

Claim settlement ratio is a crucial factor to consider as it depicts an insurer’s trend of settling claims. You must compare the claim settlement ratio of various insurers before choosing one.