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What is No-Claim Bonus in Health Insurance? Research Team | Posted On Wednesday, September 04,2019, 03:56 PM

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What is No-Claim Bonus in Health Insurance?



No-Claim Bonus in Health Insurance:

There are several terms and conditions associated with the health insurance policy. To understand your health insurance policy better; you must understand these terms. The No-Claim Bonus or NCB is an important term that you must understand and consider before availing health insurance.

Keeping in mind the current medical inflation, hospitalization can be expensive. The no-claim bonus comes to the rescue as it helps increase the sum assured via accumulation of bonus and you can make a higher claim in times of medical emergency.

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What is No-Claim Bonus in Health Insurance?

What is the No-Claim Bonus?

The no-claim bonus is an important factor associated with the health insurance plan. The no-claim bonus is a type of reward received by the policyholder for not making a claim during the year.

Some insurers extend the no-claim bonus in the form of a cumulative bonus and some others; a discount on the premium. The percentage of bonus or discount extended is at the discretion of the insurer.

The cumulative bonus can be for a period of 10 consecutive claim-free years. However, it is important to renew your health insurance policy before the due date to avail the benefits of the accumulated bonus.

See Also: Health Insurance for Disabled

Types of No-Claim Bonus:

Cumulative Benefit: The cumulative benefit refers to a type of bonus payment made to the policyholder; for making no claims during the financial year. The cumulative bonus is a percentage of the sum assured that is added to the current year’s coverage amount for each claim-free year; thus enabling the policyholder to increase the claim amount.

Discount on Premiums: This is another way through which the insurer rewards the policyholder for each claim free year. You receive a discount of a certain percentage on your premium amount. The discount varies from insurer to insurer and is at the sole discretion of the insurer.

Most of the health insurance plans in India come with the no-claim bonus benefit; but the percentage of discount or cumulative bonus varies across insurers.

See Also: How to Buy Health Insurance Policy?

How Does the No-Claim Bonus Work in Health Insurance?

Many a time policyholders do not make any claim on their health insurance plans during the year. It so happens that some of the years remain claim-free. Sometimes the hospital expenses are affordable and you may pay them from your pocket. A full year of no claims on health insurance plans makes you eligible for a no-claim bonus.

Let’s say you have bought a health insurance policy with sum assured of Rs 5 Lakhs. Your insurer offers a 5% cumulative bonus for each claim-free year with a maximum of up to 50% of the sum assured.  The total sum assured available after each claim-free year would be:

After first claim free year = 5% of 5 Lakhs = Rs 5.25 Lakhs.

After second claim free year = 5% of Rs 5.25 Lakhs = Rs 5,51,250.

Therefore, after two consecutive claim-free years, your sum insured comes to Rs 5.51 Lakhs. The health insurance policy also offers the option of portability of the NCB. This means the NCB accumulated in your health insurance plan for each claim-free year can be transferred to some other health insurance policy with the same or different insurer.

See Also: Health Insurance Benefits

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