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Choose an insurer with a claim settlement ratio of at least 95%

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I’m 30 years old and want to buy a 1 crore term plan. There are too many plans in the market; which one should I opt for? Please suggest riders too. My monthly salary is 50,000. I am married and have no kids at present.

—Name withheld on request

To select an insurer, you should consider the claim settlement track record. There are a reasonable number of insurers with a more than 95% claim settlement ratio. You should select an insurer who could match your benefit requirements and offer the lowest premium. Death claim payments are typically very high because the regulator does not allow any exclusions.

At your salary, 1 crore is a reasonable sum assured. Increasing sum assured plans may automatically increase the sum assured every three to five years, or give you an option to increase the sum assured in case of a major life event such as having a child. It would be a good idea to consider increasing sum assured plans in your life stage. Alternatively, it is also okay to buy a regular term plan and then a new top-up for an incremental amount every five years.

I recommend the critical illness rider along with term insurance. This rider will pay a lump sum in case the insured gets diagnosed with one of the named critical illnesses. The key thing to look at in critical illness is the number and types covered. This varies from one insurer to another and ranges between four to 25. Prefer an insurer with a higher number of critical illnesses covered. Also, opt for critical illness riders that cover diseases that may not require extensive hospitalization, such as Alzheimer’s or stroke. These diseases are difficult to cover in standalone health insurance.

I am a 36-year-old married man. I have one kid and I want to buy term insurance. Please help me choose the best insurer. Since life insurance is a long-term commitment, I don’t want my nominees to face any trouble in future.

—Name withheld on request

The claim settlement track record of an insurer is a good way to ascertain its credibility. You should select an insurer with a more than 95% claim settlement track record.

Another proxy to assess an insurer’s customer service is the number of grievances reported relative to policies issued by the firm. Lower the better. This information is available in Insurance Regulatory and Development Authority’s annual report.

Abhishek Bondia is principal officer and managing director, SecureNow.in.

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