Unpacking Claim Settlement Ratios of Life Insurance: Why They Are Important For You?

What are the most common reasons for claim rejections?“While the motive is to ensure that all genuine claims are paid, the most common reason for a case going into repudiation is material non-disclosure at the proposal signing stage,” Dr Peshoton states. This usually means that the insured did not disclose certain important information that would have otherwise impacted the issuance of the policy. “The most common non-disclosures are health-related, for example, not disclosing a medical condition that would have influenced the underwriting decision at the time of policy application,” says Dr Peshoton. Arora adds, “Non-declaration of lifestyle habits like smoking, old insurance policies, correct occupation, correct income, correct education levels are also common reasons for claim rejections.”Certainty of claim is the most important factor for buyers of insurance, and claim settlement ratios do indicate how sure one can be that a claim will be settled.Says Asha Murali, Partner, Actuarial Services, BDO India, “However, buyers should ensure that they take responsibility for providing correct information to the insurance company and not rely solely on claim settlement ratios.”Most times the need to provide accurate information about their health or any other particulars sought by the insurance company is not understood by the buyer. “It is extremely important to do so as this information will be used by the insurance company in arriving at a decision to offer cover or deny or the terms and conditions on which to offer cover. Certainly, buyers should look at the claim settlement ratios while choosing providers, but they should take the onus of providing the right information.”

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