No Claim Bonus in Health Insurance

The word ‘bonus’ has such a positive ring to it. However, one might wonder if these three words – No, Claim and Bonus have a similar impact when considered together. The scepticism might be because of the presence of ‘No’ and ‘Claims’. But there is no need to worry.

No Claim Bonus (NCB) in health insurance rewards you for each year without claims. It boosts your sum insured or reduces premiums, enhancing your coverage affordably. NCB signifies insurer appreciation for maintaining good health and avoiding claims. Read ahead to know more about what is No Claim Bonus in health insurance, its types, features, and benefits.

No Claim Bonus in health insurance is offered by the insurer to the policyholder based on certain terms and conditions. The main clause for availing No Claim Bonus is that the policyholder shouldn’t have raised a claim during the previous policy period.

The No Claim Bonus, in a way, is a reward for the policyholder for staying health conscious and not raising a claim. The insurer doesn’t mind rewarding the policyholder to ensure customer loyalty. Also, offering No Claim Bonus is much more feasible for insurers than settling medical insurance claims that can run into lakhs of rupees.

The working of No Claim Bonus for health insurance depends upon the type of NCB offered by the insurance company. Here’s a basic explanation of how No Claim Bonus is calculated.

Consider Mr X has a policy with a sum insured of Rs. 5,00,000. It had cost Rs. 5,000. As no claim was raised during the policy period, the insurance company offered him a discount of 10%. Therefore, Mr X had to pay Rs. 4500 to renew his plan. He saved Rs. 500.

Mr X does not raise a claim for his Rs. 5,00,000 policy. While renewing the plan, his insurance company offers him a boost in Sum Insured by 10%. This takes his sum insured to Rs. 5,50,000. If he does not raise a claim during the next year as well, the Cumulative Benefit will again kick-in and the sum insured will rise to Rs. 6,00,000.

In the case of Cumulative Benefit, there might be a limit of 50%. This means the additional sum insured cannot go up to more than 50% of the original value. In the above case, Mr X’s sum insured will rise till Rs. 7,50,000 for five continuous claim-free years, and then stop with respect to the bonus benefit.

The percentage of Cumulative Benefit will be stated in the policy document. Also, different companies might offer this benefit from 5 to 50%.

Also, check: Mediclaim Policy

An Add-on is an additional benefit that you can purchase by paying a price. Here, the No Claim Bonus Add-on will increase the percentage of the bonus at the time of renewal in case no claims are raised during the previous policy period.

Note that purchasing this Add-on will increase the payable premium. Therefore, it is suggested to analyse the premium, your health condition, and the perceived benefit in detail before buying the Add-on.

On average, the No Claim Bonus offered by Indian insurance companies is in the range of 5 to 20%.

 If you wish to move to a different health insurance company, your accumulated No Claim Bonus will stay active.

No Claim Bonus amount in the sum insured can be availed by any family member in case of a Family Floater policy.

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