Few Things to Keep in Mind While buying Insurance Policy
If you are, the one who have inadequate knowledge about how to select private insurance then you have landed on the right page in internet. Two most important factor while selecting an Insurance Company are the solvency ratio and claim settlement ratio which are also available in the IRDA website. Let us first understand what are these ratio?
What is Solvency Ratio?
The solvency ratio is the measure, which informs that the company will stay solvent. Solvency ratio includes debt to equity, debt to total assets and interest coverage ratio. With the help of solvency ratio one can make sure that whether the company’s cash flow is sufficient to meet its short term as well as long-term legal responsibilities. Hence, solvency ratio is the crucial component, which must be considered before the selection of the insurance company. Based on the solvency ratio you can select the best insurance company. Solvency Ratio is available in the annual report published on the IRDA website. All the private insurance companies have to report their solvency registered with IRDA quarterly.
What is Claim Settlement Ratio?
IRDA also asks the insurance company to maintain one of the most crucial factors, which is claim ratio. The main purpose of the insurance will be beaten if the policyholder does not get the claim when required.
In that case, the claim settlement ratio is required and it can be explained as the total number of death claims settled by an insurance company.