The internet has given us the choice of comparing quotes from the Insurance companies. Now let’s imagine you are smart enough to cut through all the jargons like critical riders, add-ons, etc, and are able to arrive at the best and cheapest quote. Does it make sense to go for the cheapest quote?
Before, we answer that question in a Yes or No, let’s take a look at the Death Claims figures. The source is the IRDA Annual Report 2008-2009.
LIC paid 564389 claims as against 40739 by all the Private Insurers. Comparing the volumes is not the right thing to do, you might say. Though this points out to the fact that the PSU Insurer has a well oiled machinery to process the claims that it gets.
Let’s see how many claims in percentage that have been refused/repudiated and what percentage is lying outstanding.
Repudiation: Death Claims that have been refused:
LIC: 1.33 %
Private Insurers: 9.97 %
Outstanding Claims: Claims pending at the year end:
LIC: 3.34 %
Private Insurers : 11.30 %
Some private insurers like Max Newyork (2.33), Bharti Axa(2.80) and Birla Sunlife (1.03) have a lesser outstanding percentage while IDBI Fortis (72.15) Canara HSBC (65.14), Sahara (50.41), Aegon Religare (20.80) Kotak Mahindra (20.45), Metlife (22.81)HDFC Standard (16.57), ICICI Pru (13.21) figures are dismal.
Aegon Religare claims to have the cheapest insurance policy available. But if you take time to look at their repudiation figures (claims that they have refused), it is 48.48% as per IRDA’s report! This essentially means that they repudiate every second claim that they receive!!
Based on the data above, do you still think that buying the cheapest insurance policy is the best option? Or should you give a thought to the Insurer’s payout details too?
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Hi Ranjan ,
Definitely its one of the most imp parameter according to me .. Though one may pay more but you ensure that your survivors dont have additional pain to go through at that moment…
@Dhruv Thanks for taking time to comment. That’s an important point!
Eye opening fact, thanks for sharing, Ranjan. These days, so many people are beating about Aegon-Religare being cheapest term insurance. Personally, I had poor experience with their sales. I withdrew thinking if sales is so bad, how worse could service be in the unfortunate event of claim.
These figures give a poor account of private insurance cos in general and Aegon-religare in particular.
@BRS Thanks. Would love it if you can share your experiences here.
@ranjan,
regarding Aegon-religare, I tried to call them for certain clarifications. I was put on hold all the time, once even as long as 15 mins. I also left my phone number with callback option. They never bothered to call back. Same with email.
To me, it looks like Aegon Religare is happy to sell you policy online. But, they are not available for any clarification whatsoever. So, in the unfortunate event of claim, chances of settlement appeared slim. Hence, I dropped it.
I think the figures you have published makes me feel I took a good decision.
Thanks Ranjan for highlighting this.
Can you please pass on the IRDA website link where you found these stats?
Wonder how IRDA can let these guys operate with such huge deviations from the industry average.
@Saurabh. You can download the 200+ page annual report @ http://irda.gov.in/ADMINCMS/cms/frmGeneral_List.aspx?DF=AR&mid=11.1. The statements about claims are very revealing.
Dear Sir
I made a mistake. I took one of their term plan allured by cheapest term plan. I am paying premium Rs.8000/- p.a. Two years have just completed. Should i discontinue??
Yours faithfully,
S.Das
@Sankha DeepDas No, you should not discontinue. They’ll forfeit all the money u have paid. To be fair, the private Insurers are new and might take time to set up a well oiled claim machinery. Plus, if it is a fair claim, they can’t repudiate just like that.
The idea of the post was not to slam cheap term insurance. It was about factors that you shd look into, like claim performance. And the figures are macro aggregates and each case is different.
Dear Sir
We are really grateful to you. But media is responsible all this brouhaha. Everyone was saying Ohh!! AR is damn cheap. You don’t find such a cheap plan in entire market. Even in a show conducted by outlookmoney, the expert like monika halan suggested such crap scheme.
Feeling like a mouse in front of cat.
Thanks for replying.
Best regards
S.Das
This is the very reason I considered buying Term policies from two different vendors (LIC and Birla Sun Life). Dividing the total sum assured requirements in two and then buying two policies. That way I was able to diversify this risk…
shri ranjan ji side hindi me bhi dikhave
@ Mahesh
केवल सस्ता हो येही केवल important नहीं है. यह भी important है की कंपनी का claim performance कैसा है
@Ranjan
The data which you have given .
——
Repudiation: Death Claims that have been refused:
LIC: 1.33 %
Private Insurers: 9.97 %
Outstanding Claims: Claims pending at the year end:
LIC: 3.34 %
Private Insurers : 11.30 %
——–
Is it for pure Death cover (term insurance) . Does the LIC data include the endowment plans also ? Just want to make sure that the data is comparable ?
Manish
It’s for both endowment and term plans. I don’t think private insurers sell only term insurance (? )