No-Claim Bonus in Health Insurance

NCB or No claim bonus in health insurance is the bonus your insurer rewards you on a claim-free year. You should pick a health insurance plan with the maximum No Claim Bonus/Cumulative Bonus for every claim-free year so that your sum insured increases.

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      What is a No Claim Bonus?

      A no claim bonus is a remunerative benefit offered to the policyholder in their health insurance policy. Also known as NCB, it is a modest way through which the insurance company rewards the policyholder for having a claim-free year. Under this benefit, a monetary benefit is provided to the insured if no claims are raised in the previous policy tenure. Thus, the no claim bonus is one of the most significant factors to consider while purchasing a health insurance plan in India.

      What Are the Types of No-Claim Bonus?

      In a health insurance policy, generally, there are two different types of no claim bonuses. They are:

      (i). Cumulative Bonus

      Under this benefit, if the policyholder has a claim-free year then the coverage amount or the sum insured of the policy increases by a certain percentage. However, the premium of the policy remains the same.

      For instance, you have purchased a health insurance plan of Rs5 lakh and the insurance company provides a no claim bonus of 5% for every claim-free year. If you have not made any claim for the first year of the policy then the sum insured of your policy will increase by 5% i.e. Rs 5.25 lakh with no change in the premium rate. Similarly, if you do not file any claim for two consecutive years, then the coverage amount of your policy will increase by 5% i.e. to Rs 5.5 lakh for the same premium rate. This means that in case you get hospitalized in the 3rd policy year, then you can file a claim up to Rs 5.5 lakh.

      (ii). Discount on Premium

      Under this type of no claim bonus, the renewal premium rate of the policy decreases by a specific percentage for every claim-free year. However, there are no changes made to the sum insured of the policy.

      For example, suppose you have purchased a health insurance plan in India for a coverage amount of Rs. 5 lakh in exchange for a premium of Rs 10,000 annually. The insurance company offers a discount of 5% on the renewal premium amount for every claim-free year as the no-claim bonus. Therefore, at the time of policy renewal, you will have to pay Rs. 9,500 as the premium for your policy while the sum insured of the policy will remain the same.

      How is No Claim Bonus Beneficial?

      Take a look at the reasons that make no claim bonus a beneficial benefit for policyholders:

      • No Claim Bonus helps you to ensure better financial protection for your family and yourself at the time of any medical emergencies.
      • It reduces the cost of renewing the health insurance policy by getting more coverage at a lower premium.
      • The benefit of a no claim bonus encourages the policyholder to stay healthy and fit and only file a claim when it is very much required.
      • No claim bonus is offered in individual and family health insurance by most of the health insurance companies in India. However, the terms and conditions of the policy may vary from one insurer to another.

      How Much Will the Sum Insured Increase under Cumulative Bonus?

      Although the policyholder can increase the sum insured of the policy through a cumulative bonus, it can be done up to a certain limit only. Generally, the coverage amount can be increased up to 50%-100% of the original sum insured. Since the terms and conditions for cumulative bonus vary for the different insurance providers, you must go through the policy documents to know the exact limit.

      For instance, let’s say you have a health insurance policy of Rs 2 lakh and your insurance company offers a cumulative bonus of up to 50%. In this case, the coverage amount of your health insurance policy can be increased maximum by Rs 1 Lakh, which is 50% of the base sum insured amount. Thus, your sum insured can increase up to a maximum of Rs 3 lakh.

      No Claim Bonus Applies to Individual As Well As Floater Health Insurance Plans in India

      No claim bonus is available under both individual and family health insurance plans. Under the individual health insurance policy, the coverage is offered only to the policyholder whereas the family floater health insurance policy provides coverage to the entire family. So, irrespective of whether you have an Individual health insurance plan or a floater health insurance plan, you can avail the benefit of a no-claim bonus if you do not make any claim in the previous policy year.

      Do All Health Insurance Plans in India Offer No Claim Bonus?

      No. Not every health insurance plan in India offers the facility of no claim bonus. The plans that do offer no claim bonus comes with their own terms and conditions. Thus, it is very crucial to read the policy documents in detail while purchasing the policy so that you know whether it offers the no claim bonus facility or not. Also, make sure that you clearly understand the terms and conditions of the policy pertaining to NCB. For instance, by how much the policy coverage can be increased, what is the % of NCB, etc. You can compare health insurance plans online based on the no claim bonus and accordingly, buy the most suitable plan for yourself.

      Wrapping it Up!

      In this day and age, the mushrooming cost of medical treatment and hospitalization has made it extremely difficult for the common man to avail of the right medical facility. No claim bonus is a lucrative way to enhance your health insurance policy coverage and ensure the safety of you and your loved ones against any type of medical emergency. Do remember to read the policy documents and understand the NCB terms before buying the policy.

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