Choosing a life insurance plan is definitely not an easy task. You should understand the premium amounts you are going to pay each month or for a period. At the same time, you should understand the sum assured for the plan you have enrolled and the chances of getting the hassle-free claim amount.
In case the policyholder for the term insurance dies, the beneficiary would need to file a claim for the term insurance to receive the sum assured at the time of putting in the claim.. As soon as the formal process of submitting the valid proof of death along with the required documents from the insurance provider is completed, the insurance company will validate the proofs and start processing the claims. The claim payouts are either in a lump sum or in installments on a monthly basis depending on the option, you have chosen at the time of enrollment.
The claim payments work in a way that a lump sum amount from the sum assured will be paid at the death of the policyholder and rest of the money assured will be paid on a monthly basis to the nominee or beneficiary. You should select payout option at the time of enrollment to the plan. You cannot change the options when the plan is in force. However, each of the options you choose comes with benefits associated with it.
Type of Payouts under Term Insurance
You can opt for payout options for the sum assured when you enroll in a term insurance plans. You can either choose to avail the claim amount in a lump sum at a time or opt for an equal payout option for lump sum amount and for the installments.
Lump sum payment – You can choose to select 50-70% sum assured in a lump sum and remaining amount in installments to the dependent of the policyholder.
Lump sum and monthly in equal proportion – You get to choose 50% of the sum assured to be paid in lump sum and 50% of the remaining amount will be paid in monthly installments. This option will let your family enjoy the financial support when you are not around for a longer period of time.
Sum assured with increasing monthly income – In this payout option, the fixed lump sum is paid to the nominee at the death of the policyholder and the remaining amount will be paid on a yearly basis with an increase in a payout of 10%-20% on a monthly basis.
Choosing monthly payout option for the term insurance has several benefits associated with it. You can have a constant source of income for your family member even if you are not physically present in front of your family members. When you choose to go for monthly payments, you have to pay less premium for your Term insurance plan.
Claim Settlement Ratio for Term Insurance in India
Before enrolling in an insurance plan, you must choose your insurance provider very carefully. To understand whether the insurance provider is good for you or not you should know the claim settlement ratio for that company. Moreover, Claim settlement ratio is a measure of customer satisfaction and claim settlement percentage for the insurance company.
The claim settlement ratio may go up to 99% percent for any company. The Insurance regulatory authority of India has been helping the public with the claim settlement ratio for all the insurance providers. Therefore, the public takes the right decision about their insurance plans.
The whole purpose of the claim settlement ratio is to understand the number of claims for the term insurance accepted by the insurance company. The greater the claim settlement ratio, the better the insurance provider is. There are many reasons for an insurance provider to reject the claims. It is sometimes the case when the private companies litigate for more premiums and settle for less. The company with high settlement ratio generally works for the welfare of the people. The claim settlement ratio varies from one company to the other and the prime reason is the customer base. Companies with older base also tend to have higher settlement ratio than the company without a new base. You should go through the claim settlement policy for each of the insurance providers and decide on the best insurance plan with high settlement ratio. You can compare the same on Coverfox.com to get the best option.
Choosing an insurance plan is not an easy task. You have to consider several factors before choosing an insurance plan. One of the factors along with your premium payment you must choose is the claim settlement ratio for your term insurance plan.