Most people buy a policy from a particular life insurer because a friend, a relative, or an insurance agent recommended it. But that’s a thin reason to invest in a contract where you’ll be paying for at least 20 to 30 years. What’s more important is that the same contract will act as a safety blanket for your family in case you’re not around anymore.
So, it makes sense to test the waters before committing to buy a life insurance policy. Here are 5 vital checks to consider.
1. Check the CSR (Claim Settlement Ratio)
The claim settlement ratio is the share of death claims an insurer paid out of all the claims it settled in a year. IRDAI publishes it for every life insurance company in its annual report and its yearly handbook of insurance statistics.
Most insurance buyers check one figure, but IRDAI reports two. The ratio by number counts claims, while the ratio by amount counts the money paid. Say an insurer pays 99% of claims by number but only 94% by amount. That means it pays the small claims smoothly and contests the larger ones. It matters more if you're buying a term plan with a significant sum assured, like 1 crore or above.
Pro Tip: Check at least three years of CSR data to gauge the reliability of the insurer.
2. Check the Solvency ratio
Solvency compares what an insurer holds with what it could owe. IRDAI requires every life insurer to keep the solvency ratio at 150% or more. So, an insurer company sitting over and above150% supposedly will have more cushion for a year when claims increase, or markets fall.
3. Check the number of Complaints and time to resolve
Complaint numbers are often misleading as big insurers have more customers. The IRDAI annual report shows complaints per 10,000 policies. This helps you compare a large insurer with a small one. Under IRDAI rules, insurers must resolve a complaint within 14 days. So, if you see an insurer with too many open complaints, you’ll know what to do.
4. Check for Persistency
Persistency tells you how many policyholders are still paying premiums after 13 months, and again after five years. Every insurer is required to publish the figures in the quarterly public disclosures on its website.
A consistent, low 13th-month figure shows the insurer sold policies to people who either didn't need or understand them. The persistency figure has no bearing on your claim, but it separates a pushy insurer from a non-pushy one.
5. Check the insurer company size and credit rating
A credit rating from an agency, like CARE or CRISIL, is a reliable outsider opinion on the financial strength of an insurer. Additionally, knowing the size of the company helps you understand how capable the insurer is of weathering a bad year. Whether it pays a claim right is a separate question, and you can always tally that with the claims record data.
How to use the checklist before choosing the insurer
Here’s what to do with the vital figures of a private life insurance company available through public disclosure.
Number |
| Benchmark |
Claim settlement ratio | 99.33% FY 2025-26 | Compare by amount and over three years [insert by-amount figure from IRDAI handbook] |
Solvency ratio | 266% as at 31 March 2026 | IRDAI minimum: 150% |
Complaints | 38 per 10000 policies and 2 per 10000 claims FY 2025-26; none pending at 31 March 2026 | Compare with the industry figure in the same report |
13th-month persistency | 80.6% by premium 78.0% by number of policies FY 2025–26 | Compare with two or three other insurers |
Credit rating | AAA (Stable) CARE Ratings | Highest rating on CARE's scale |
What every insurer owes you
According to IRDAI's September 2024 master circular on policyholder protection, some universal protections don't rely on a particular insurer. Additionally, it sets strict deadlines for claim settlement across different situations.
Situation | Deadline |
Death claim no investigation needed | 15 days from claim intimation |
Death claim that needs investigation | 45 days including the investigation |
Surrender or partial withdrawal | 7 days |
Complaint resolution | 14 days |
Free-look period to cancel a new policy | 30 days |
Note: If a death claim is paid late, the insurer owes interest at 2% above the bank rate.
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