Benefits of No Claim Bonus (NCB) in health insurance
There are multiple advantages of the No Claim Bonus feature in health insurance, making it a valuable benefit for policyholders.
● Financial protection
NCB lets you upgrade your policy to fit all your requirements without worrying about paying the entire premium. This is because you can utilise the bonus as a discount on the premium. Thus, you get comprehensive coverage for health emergencies.
● Increased sum insured
NCB lets you increase the sum insured of your health insurance policy while maintaining the same premium value. This helps you get maximum financial support at the time of need.
● Portability
NCB in health insurance is transferable. Suppose you switch to a different insurance company. In that case, the bonus you gained all these years will remain and is applicable. You can get it transferred to the new insurance provider. Check porting in health insurance.
How does No Claim Bonus work in health insurance?
The calculation of No Claim Bonus for health insurance depends on the type of NCB offered by the insurer. It can either be an increase in the sum insured or a discount on the renewal premium. The following scenarios explain how it works:
Type of NCB
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How it works
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Cumulative bonus
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The sum insured increases by a fixed percentage for each claim-free year, enhancing coverage without additional costs.
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Premium discount
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Instead of increasing the sum insured, the insurer offers a discount on the renewal premium, reducing the financial burden.
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Maximum cap limit
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Insurers may set a cap on the cumulative bonus, meaning the sum insured increase stops after reaching a certain percentage.
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In case of a discount on premium
Consider Mr X, who has purchased a health insurance policy with a sum insured of Rs.10 lakh and an annual premium of Rs.5,000. Since he has not made any claims during the policy year, his insurer grants him a 10% discount on the renewal premium. As a result, instead of paying Rs.5,000, he only needs to pay Rs.4,500 to renew his policy, saving Rs.500.
In case of an increased sum insured
Suppose Mr X holds a health insurance policy with a sum insured of Rs.10 lakh and does not file any claims during the policy year. Upon renewal, his insurer rewards him with a 10% increase in the sum insured, raising his coverage to Rs.11 lakh. If he continues to remain claim-free for another year, the sum insured will rise to Rs.12 lakh due to the cumulative bonus.
However, cumulative bonuses are typically subject to a cap, often set at 50% of the original sum insured. This means that after five consecutive claim-free years, Mr X’s sum insured will reach a maximum of Rs.15 lakh. The specific percentage increase and the upper limit of the cumulative bonus vary between insurers and are detailed in the policy document.
What is the add-on cover for No Claim Bonus in health insurance?
Some insurers offer No Claim Bonus protection cover as an add-on. This allows the policyholders to retain their NCB even after an insurance claim during their policy period. You can buy this add-on by paying an additional premium while buying the policy. It is advisable to understand your insurance policy, read the policy document carefully, and evaluate the add-ons based on your needs before purchasing the best health insurance policy.
Is No Claim Bonus applicable for both individual and family floater policies?
Individual health plans cover only the policyholder, while family floater plans provide health insurance coverage for the entire family. NCB is applicable for both individual and family floater plans provided the insured member does not make any claim during the policy year.
Is No Claim Bonus offered by all health insurance policies?
Not all health insurance policies provide No Claim Bonus. Additionally, the terms and conditions for NCB may differ from policy to policy. Read the policy document carefully to know if NCB is applicable and what is the extent of the discount it offers.
How no claim bonus impacts your sum insured over time?
The health insurance no claim bonus allows policyholders to enhance their sum insured without additional costs for every consecutive claim-free year. Over time, this can significantly increase coverage, ensuring better financial security. However, insurers often impose a cap, typically at 50% or 100% of the original sum insured. Understanding this limit helps in maximising the benefits of NCB.
Difference between no claim bonus and cumulative bonus
Although the terms no claim bonus and cumulative bonus are often used interchangeably in health insurance, they have distinct differences. The table below highlights these key differences:
Aspect
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No Claim Bonus (NCB)
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Cumulative bonus
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Definition
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A reward for policyholders who do not make claims during a policy year.
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A specific type of NCB that increases the sum insured for every claim-free year.
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Form of benefit
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Can be a discount on the renewal premium or an increase in the sum insured.
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Only increases the sum insured while keeping the premium unchanged.
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Application
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Applies to both sum insured enhancement and premium discounts.
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Exclusively applies to the sum insured.
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Limitations
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Insurers may set a maximum cap on premium discounts or sum insured increments.
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Typically capped at 50% or 100% of the base sum insured.
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Understanding the difference between no claim bonus health insurance and cumulative bonuses helps policyholders make informed decisions about their coverage and financial benefits.
The additional funds acquired from an NCB in health insurance also help you save money and get the best healthcare facilities without worrying about funds. Therefore, check with your insurance companies about the NCB benefit before purchasing insurance.
Conclusion
The no claim bonus in health insurance is a valuable feature that rewards policyholders for staying healthy and maintaining a claim-free record. Whether through increased sum insured or reduced premiums, it enhances financial protection over time. Before purchasing a policy, it is essential to review the insurer’s NCB benefits to maximise coverage and cost savings.
