Team AckoJul 22, 2021
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 simply means a bonus for not raising a claim.
No Claim Bonus is of great importance to policyholders. Its true benefits are derived in the long run. Also, there are different types of NCBs offered by health insurance companies in India. 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 health insurance claims that can run into lakhs of rupees.
Offering No Claim Bonus is common in the health insurance sector. Both private sector and public sector insurance companies offer NCB to eligible policyholders. However, there is a difference in the type of NCB offered.
There are two types of No Claim Bonus offered by insurance companies in India; Cumulative Benefit and Discount on Premium. Here’s an overview of both types of NCB.
As the name suggests, this type of No Claim Bonus offers a discount on the payable premium during policy renewal. Thus, policyholders get to continue their health plan at a discounted rate.
Under this type of No Claim Bonus, there is no discount offered but there’s an increase in the Sum Insured. Thus, policyholders are rewarded with an increased sum insured during policy renewal for not raising a claim.
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%.
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.
The most important benefit of No Claim Bonus is that you can either save money while renewing the plan or have more money as part of the sum insured, which is also a kind of saving.
If the hospital bill is not too much, then you can choose to pay it yourself and not raise a claim. This will help you make the most of Cumulative Benefit.
Will I lose my accumulated No Claim Bonus if I switch from an Individual plan to a Family Floater plan?
Your accumulated No Claim Bonus can stay intact if you switch from an Individual plan to a Family Floater plan, however, there might be limitations attached to it. Also, it depends upon the terms and conditions.
What happens to the No Claim Bonus if I don’t renew my policy?
No Claim Bonus comes in the picture while renewing your plan. Your health insurance policy will be deactivated if you do not renew it, and your accumulated NCB will cease to exist.
How much discount on the premium can I expect while renewing my health policy?
The amount of the discount provided by an insurance company as No Claim Bonus during policy renewal is based on its discretion.
Is there a way I can increase my No Claim Bonus?
You have the option of purchasing a No Claim Bonus Add-on if you wish to boost the percentage of No Claim Bonus.
Is Cumulative Bonus in health insurance better than Discount on Premium?
There is no direct answer to this question as some people prefer availing a discount on the premium while others like their sum insured to be increased based on the Cumulative Bonus in health insurance.
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