What makes a life insurer trustworthy? Start with claim settlement behaviour

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Life insurance is often bought on simple comparisons: the lowest premium for a large cover, the brand name, the online buying experience, or a bundle of riders. But the credibility of a life insurer is not decided at purchase. It is decided when a claim is filed. For most families, that moment comes only once, after a death, when the policyholder is no longer there to clarify details or fix mistakes. That is why claim settlement matters more than any marketing promise.

Why claim settlement is the moment that counts

Term insurance is not like a product you “use” every year. The value shows up only at claim time. If the insurer pays quickly and fairly, the policy does its job: it replaces income, clears liabilities, and gives the family breathing room. If the claim is delayed, disputed, or rejected, the policy can turn into another source of stress at the worst possible time.

This is also why families should treat claims performance as a core part of decision-making, not an afterthought. A slightly cheaper premium is not meaningful if the claims experience is inconsistent.

People often rely on claim settlement ratios, the percentage of claims paid versus claims received. This number can be a helpful first filter, but it should not be used in isolation. A high ratio does not automatically mean every claim is handled smoothly, and a lower ratio does not always mean an insurer is unfair.

What matters alongside the ratio is consistency over several years, clarity on why claims are rejected, and whether the insurer has a reputation for predictable processes. A good claims record is usually visible in the details: fewer disputes, clear documentation requirements, and reliable timelines.

Many rejected claims come down to non-disclosure or incorrect information in the proposal form. This can include undisclosed health conditions, inaccurate smoking or drinking habits, or inconsistencies in income and occupation details. Insurers are allowed to investigate and challenge claims when the application information is wrong, especially in the early policy years.

This is why credibility is a shared responsibility. The insurer must ask clear questions and underwrite properly. The policyholder must disclose fully and accurately. A term plan bought in a hurry, with vague or incomplete answers, is more likely to create trouble for the family later.

Even when claims are eventually paid, the process can be smooth or painful. A good insurer makes it easy for families to file a claim, clearly lists required documents, and communicates actively on timelines and status. A poor process creates repeated follow-ups, unclear requirements, and long waiting periods that drain families emotionally and financially.

In practice, this is what families remember. They may not remember whether the premium was Rs 900 a month or Rs 1,100 a month. They will remember whether the insurer treated them fairly and efficiently when it mattered.

A sensible approach is to look at multiple indicators together: claim settlement performance over several years, the insurer’s disclosures about repudiations and reasons, average turnaround time for claims, and the accessibility of customer support. It also helps to check whether the insurer offers a clear claims guide and dedicated claim assistance.

Finally, do the basics right on your side. Keep nominees updated, store policy documents where your family can find them, and tell at least one trusted person what policies exist. Many claim delays happen not because an insurer refuses to pay, but because families struggle to locate documents or understand what needs to be submitted.

At the end of the day, life insurance is a promise. Claim settlement is how you judge whether that promise is dependable.

It is a useful starting point, but you should also look for consistency over multiple years, transparent reasons for claim rejections, and a clear claims process with predictable timelines.

Incomplete or incorrect disclosure at the time of buying the policy is a major reason. Accurate health, lifestyle and occupation details matter more than getting the lowest premium.

Buying online is not the issue. Rushing through the form, skipping disclosures, or misunderstanding policy terms is what increases claim risk.