Why ULIP mis-selling has become rampant ?
Why is there so much mis-selling of ULIP? How to avoid this mis-selling? Who should take ULIP?
The reputation of any life insurance company comes to the fore when one files a claim. This is because the primary responsibility for any insurer is to pay claims on time. If the insurer does not pay the claim amount when you need it the most, you are bound to feel devastated and cheated.
Death claim settlement ratio is an important point to consider before buying from an insurance company.
Death claim settlement ratio is defined as number (or amount) of claim paid by the insurer compared with the total premiums received. For example, if the death claim settlement ratio of the insurer is 98%, it means out of every 100 claims received the company paid claims for 98 policies.
According to the latest annual report of Insurance Regulatory and Development Authority of India (Irdai), Max Life has the highest death claim settlement ratio at 99.2% as on March 31, 2019, followed by HDFC Life and Tata AIA Life at 99.07% and 99.06%.
Claim settlement ratio of LIC was at 96.69 % compared with 97.79%. The proportion of repudiations has increased to 0.81% in 2019-20 compared to that of 0.43 % in previous year. Look at the table below for insurers with highest death claim settlement ratio:
Source: Irdai report.
The life insurance companies have paid 8.46 lakh claims on individual policies, with a total payout of Rs 18,042 crore in the year 2019-20. The number of claims repudiated was 8,927 at Rs 555 crore. The number of claims rejected was 2,262 for an amount of Rs 20 crore.
Source: IRDAI
The industry’s settlement ratio declined to 96.76% in 2019-20 from 97.64% in 2018- 19 and the repudiation ratio increased to 1.02% compared to that of 0.74 % in 2018-19.
“The life insurance industry paid total benefits of Rs3.51 lakh crore in 2019-20 against Rs 3.30 lakh crore in 2018-19. The benefit paid works out to 61.21% of the gross premium underwritten. LIC paid benefits of Rs 2.53 lakh crore in 2019-20, constituting 66.62 per cent of the premium underwritten,” Irdai said in the report.