How to choose the right insurance company?

The buyer today is spoilt for choice. However, when it comes to selecting an insurance provider, you need to weigh your options carefully. Here are a few tips that will help you choose the right insurance company.

How to choose the right insurance company?

Traditionally, insurance policies were not purchased, they were sold. Ask any investment savvy 50 year old and he or she will most certainly have a life insurance policy offered by the state-owned insurer. However, gone are the days where life insurance was bought because you could not say ‘No’ to a persuasive insurance agent.

Over the years, the insurance sector has seen a significant rise in the number of insurance companies, both state-owned and private. Together, these companies and IRDAI have introduced major innovations with regards to products as well as distribution channels. According to the IRDAI annual report, at the end of March 2014, there are 53 insurancecompanies operating in India; of which 24 are in the life insurance business and 28 are in non-life insurancebusiness. In addition, GIC is the sole national reinsurer.

Clearly, the buyer today is spoilt for choice. However, when it comes to selecting an insurance provider, you need to weigh your options carefully. Here are a few tips that will help you choose the right insurance company:

  • Financial Solidity

Financial stability is one of the biggest factors in deciding the right insurance provider. You need to ensure that the company has the resources to fulfill its promises. Do your homework before you make the final purchase.

The best way to look for the company’s health is to check its CRISIL rating. For example, companies with rating of AAA are considered to have the highest strength to meet its obligations, followed by the companies that have AA rating and so on.

  • The Product Line

Insurance policies are not off-the-shelf products. In order to meet the varied needs of a policyholder, insurance providers offer innovative products. Your insurance needs are different at different stages of life. Shortlist the companies that offer products that meet your needs. The company you choose should offer all types of life insurance policies to ensure you get to choose.

  • Claim Process

Paying claims or maturity benefits is the primary role of an insurance provider. Often, claims are rejected due to missing documents and misinformation. Your insurance company should have a high claim settlement ratio and a hassle-free claim process to ensure that your nominees get the sum assured in your absence.

  • Prompt Customer Service

Insurance jargons can sometimes be overwhelming, especially for first-time policy buyers. Your ideal insurance provider should have well-informed and educated managers who understand your needs and offer prompt assistance.

Most insurance providers are working towards creating awareness about insurance and do offer online resources for learning and taking an informed decision. You can also expect Live Online Chats as well as telephonic/ email assistance while buying insurance online.

  • Transparency

While not a limiting factor, the transparency that a company offers should play a vital role in your decision process. Research popular websites for getting independent feedback about an insurance company. Also look for the number of complaints and resolutions insurance providers on IRDAI’s website.

  • Consult Your Financial Planner

If you are overwhelmed with the information gathered from various sources, you may also consult your financial planner for advice. His experience and professional judgment will help you narrow down your options.

Your insurance policy is an important part of your financial plan. Its primary purpose is to offer you a protective financial cover in case of an unfortunate event. So choose an insurance provider you can rely on.

Also see: Do your homework and make an informed choice

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