The role of claim settlement ratios in strengthening your investment portfolio

It was a lazy Sunday and Tina and Beena, identical twins yet worlds apart in their approach to financial planning, found themselves lounging in their sunlit living room. The topic was close to both – strengthening their investment portfolio. 

Beena was the first to broach the subject. “Have you ever considered looking at the part of claim settlement ratios? She asked this to Tina. 

Tina, always eager to learn, tilted her head in curiosity. “Claim settlement ratio? What’s that?”

“Well,” began Beena, “it’s a measure of how many insurance claims an insurer has settled against the claims received. It’s crucial, especially when considering critical illness cover for our parents.”

“Ah, I see! So, a higher ratio means the insurer is more reliable?” Tina inquired.

“Exactly!” Beena beamed. “Let’s discuss the crucial roles this ratio plays in strengthening our investment portfolio.”

⮚  Reliability in crisis

Consider a family witnessing serious health problems. The physical and emotional toll is considerable and financial tensions can add to this. A high claim settlement ratio is like a reliable friend in these trying times. It assures families that their insurer won’t add to their burdens and will provide the financial support they need, swiftly and efficiently. This assurance is invaluable, offering a glimmer of stability when life seems most unpredictable.

⮚  Trustworthiness

In India, where the market is clouded with uncertainties, a high claim settlement ratio endows great trust. Consider a family, putting in their funds into insurance, hoping it would be their safety net. When an insurer constantly settles a high claim percentage, it sends across a strong message i.e., We are here when you need us.” This reliability is more than a statistic, it is an assurance of integrity and support, vital for anyone investing their finances and trust in an insurance provider. 

 ⮚  Product variety

Companies with high claim settlement ratios often offer a diverse range of insurance products. This variety caters to the unique and varied needs of the Indian population, providing tailored financial solutions.

⮚  Financial security

Insurance is not only a policy but also a lifeline that families cling to during their darkest times. When an insurance company reliably and promptly settles claims, it uploads this lifeline, ensuring families do not witness financial distress in addition to their prevailing crisis. In our country, where many lack adequate emergency corpus, this facet of insurance policy is a crucial pillar of financial stability and security. 

⮚  Long-term planning

For most, planning for finances revolves around life goals – a kid’s education, a comfortable retirement life and purchasing a home. A reliable policy claim settlement ratio acts as a guardrail, ensuring that your goals are not derailed by unanticipated events. It is about protecting aspirations and dreams against life’s uncertainties.

⮚  Investment continuity

Consider an individual facing an emergency. The instant reaction may be to liquidate investments, at a loss or during inopportune times, derailing financial plans. When insurance policy claims are settled, this distress sale of investments can be ignored, maintaining the integrity of your investment strategy, and ensuring that long-term financial goals stay on track. 

⮚  Risk mitigation

The heavy costs linked with critical illnesses may be staggering. In our country where medical expenditures are often expensive and out-of-pocket, a reliable policy with a high settlement ratio is a shield against such potentially ruinous expenses. It meets the financial risk, ensuring health crises do not spiral into a financial issue. 

⮚  Customer satisfaction

High claim settlement percentages result in increased customer satisfaction. Satisfied customers are the ideal brand ambassadors, since they are more inclined to suggest the insurance to others, resulting in a virtuous cycle of company development and loyalty.

⮚  Policy worth

An insurance policy’s worth is not only in its coverage but also in the probability of that coverage being honoured. A higher ratio enhances the perceived value of a policy, making it more than a contractual agreement – it becomes an assured promise.  

⮚  Mental peace

In India, where financial security and family are intertwined, knowing that your insurance company is reliable provides immense mental peace. It is the reassurance that in times of financial need, it will stand firmly by you. 

⮚  Tax benefits

The tax benefits of insurance are well-known in India. However, these benefits are only meaningful if the claims are settled. Consistent claim settlements turn these theoretical benefits into tangible financial advantages, enhancing the overall value of the investment.

⮚  Financial independence

Dependence on borrowing during critical times can lead to a cycle of debt and financial instability. Insurance policies with high claim settlement ratios provide an alternative, fostering financial independence and resilience.

⮚  Liquidity in emergency

Imagine an unexpected hospitalisation and the immediate need for cash. Quick claim settlements provide this essential liquidity, offering a financial lifeline in moments when it is most critically needed.

⮚  Estate planning

In Indian culture, estate planning is an important part of financial planning. An insurance policy that follows its obligations guarantees that these plans are not disrupted by unanticipated circumstances, preserving the financial legacy planned for future generations.

⮚  Investor confidence

A favourable claim settlement ratio boosts investor trust not only in the insurance policy but across the financial system. It is indicative of a strong, robust financial system, promoting further investment.

Final thoughts

Impressed, Tina said, “It is not just about picking any policy; it is about selecting the one that stands strong when needed most.”

Beena agreed and replied, “Right. It’s like having a trusted friend in times of need.”

Their interaction continued, with each point opening new avenues to better understanding. Towards the end, they had not just strengthened their understanding but even their will to choose insurance plans with a good claim settlement ratio, a critical constituent of their family’s finances.  

As the sun went down, they were pleased at their success. Their Sunday wasn’t only about relaxing; it was also about safeguarding their family’s future, thanks to the combined powers of knowledge and insight. 

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