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Features
Ref. No. KLI/22-23/E-BB/492
No-Claim Bonus is an excellent feature that rewards policyholders for staying healthy and managing their healthcare needs without heavily relying on insurance coverage.
Imagine this: You have health insurance and go a whole year without getting sick or injured. That’s awesome! As a reward, many insurance companies give you a No-Claim Bonus, or NCB for short. It’s like a little thank you for staying healthy. A no-claim bonus in health insurance can save you money on your next premium or even increase your coverage. So, when you’re shopping for health insurance, definitely keep an eye out for plans with good No-Claim Bonus options. Let us understand more about health insurance no-claim bonus.
A No-Claim Bonus (NCB) in health insurance or bonus on no-claim in health insurance is a reward given by insurance companies to policyholders for not making any claims during a policy year. It serves as an incentive for maintaining a healthy lifestyle and not utilizing the insurance coverage unnecessarily.
There are typically two main types of NCB health insurance policies. Let us understand them in depth:
This benefit raises the policy’s coverage amount or sum insured by a specific percentage if the policyholder has a claim-free year. However, the policy’s premium doesn’t change.
For instance, the insurance provider offers a 5% No-Claim incentive for each year you go without filing a claim after you buy a ₹5 lakh health insurance plan. If you haven’t filed any claims during the first year of your insurance, your sum insured will rise by 5%, or ₹5.25 lakh, without changing the premium cost. Similarly, your policy’s coverage amount will rise by 5% if you go two years without filing a claim.
Under this form of no-claim incentive, the renewal premium rate for the insurance is reduced by a predetermined percentage for each year without a claim. Nevertheless, the policy’s insured amount has not changed.
As an illustration, let’s say you paid a premium of ₹10,000 per year to obtain a health insurance plan in India with a coverage limit of ₹5 lakh. The insurance provider offers a 5% no-claim bonus for each year without a claim on the amount of the renewal payment. As a result, even though the policy total covered stays the same, you will still need to pay ₹9,500 as the premium at the time of renewal.
No-Claim Bonus (NCB) is a valuable feature in health insurance that offers policyholders rewards for not making any claims during a policy year. Depending on the type of policy, NCB can either reduce your premium or increase your coverage.
When no-claim bonus for health insurance is offered as a discount on your premium, it directly reduces the amount you need to pay when renewing your policy. For instance, if you have not made any claims during the policy year, your insurer may offer a discount on your renewal premium. This discount typically increases with each consecutive claim-free year, allowing you to save more over time. However, if you make a claim, you might lose the accumulated discount, and your premium could return to its original amount.
In the case of cumulative benefits, the No-Claim Bonus increases your sum insured without raising your premium. For example, if your policy offers a 10% NCB, and your original sum insured is ₹5 lakhs, your coverage will increase to ₹5.5 lakhs after one claim-free year. This cumulative increase continues each year you don’t make a claim, often up to a specified limit, like 50% of the original sum insured. This means you receive more coverage without paying extra, providing added financial security.
The No-Claim Bonus in health insurance comes with several key features that make it an attractive benefit for policyholders.
The bonus rate for NCB varies depending on the insurer and the specific policy. Typically, the bonus ranges from 5% to 20% of the sum insured for each claim-free year. This percentage can either reduce your premium or increase your sum insured. Some policies offer incremental bonuses each year, rewarding long-term policyholders who maintain a healthy lifestyle.
In a family floater policy, the No-Claim Bonus benefits the entire family. If none of the family members covered under the policy makes a claim during the year, the NCB applies to the entire sum insured. This can result in either a lower premium for the next year or an increased coverage amount for the whole family, making family floater policies more cost-effective and comprehensive over time.
One of NCB’s significant features is its portability. If you decide to switch insurers, you can usually transfer your accumulated No-Claim Bonus to the new policy. This ensures that you don’t lose the benefits you’ve earned over the years, even if you change your insurance provider. However, it’s essential to check the specific terms and conditions, as the portability of NCB may be subject to certain limitations or requirements.
The no-claim bonus in health insurance offers several benefits, making it a highly valued feature in health insurance policies.
With cumulative NCB, your sum insured increases without any additional cost, providing more extensive coverage and better protection against rising healthcare costs.
If NCB is applied as a premium discount, you save money on your policy renewals, making your health insurance more affordable over time.
Since NCB rewards claim-free years, it incentivizes policyholders to maintain a healthy lifestyle and avoid unnecessary medical claims.
In family floater policies, NCB benefits the entire family, offering either reduced premiums or increased coverage for all members, enhancing the overall value of the policy.
The ability to transfer NCB to a new insurer ensures that your hard-earned benefits are not lost, providing flexibility and continuity in your health insurance coverage.
Although the policyholder has the option to use a cumulative bonus to raise the policy’s sum insured, they can only do so up to a set amount. The coverage level can typically be raised by 50% to 100% of the initial sum insured. You must read the policy paperwork to determine the precise limit because the terms and conditions for cumulative bonuses vary depending on the insurance providers.
Consider the scenario when your insurance provider gives a cumulative bonus of up to 50%, and you have a health insurance policy of ₹2 lakh. In this situation, your health insurance policy’s coverage amount may be enhanced by a maximum of ₹1 Lakh or 50% of the base sum insured amount.
Both individual and family health insurance plans offer a No-Claims bonus. In contrast to the family floater health insurance policy, which offers coverage to the entire family, the individual health insurance policy only offers coverage to the policyholder. Therefore, if you didn’t file a claim during the previous policy year, regardless of whether you have an Individual or floater health insurance plan, you can benefit from a no-claim bonus.
Not all health insurance plans in India include the No-Claims bonus feature. Plans with no-claim bonuses have their own rules and regulations. To determine if insurance offers the no-claim bonus feature, it is imperative that you carefully study the policy terms before purchasing the policy.
Additionally, ensure you comprehend the policy’s terms and conditions related to NCB. Examples include the amount by which the policy’s coverage can be raised, the percentage of NCB, etc. Based on the No-Claim incentive, you can compare health insurance policies online and choose the one that best fits your needs
Today’s common man finds it incredibly challenging to access the best medical facilities due to the skyrocketing medical care and hospitalization expenses. A No-Claim bonus is a profitable way to increase the coverage of your health insurance policy and protect you and your loved ones from any kind of medical emergency. Before purchasing the policy, remember to read the policy documentation and comprehend the NCB terms.
1
Typically, your No-Claim Bonus resets to zero after a claim. However, some insurers offer partial retention or specific conditions.
2
No-Claim Bonus generally cannot be transferred between insurers. However, some might offer portability with certain conditions.
3
No-Claim Bonus is usually applicable to individual and family floater health insurance plans, but not all plans offer this benefit.
4
No, you do not have to pay anything extra for No-Claim Bonus. It is a reward for claim-free years, not an additional cost.
5
If your bonus is not reflected correctly, you must contact your insurer immediately to rectify the error. You must provide the necessary details to support your claim.
6
The No-Claim Bonus typically increases with each claim-free year, up to a maximum limit set by the insurer.
Amit Raje is an experienced marketer who has worked in various Fintechs and leading Financial companies in India. With focused experience in Digital, Amit has pioneered multiple digital commerce in India. Now, close to two decades later, he is the vice president and head of the D2C business department. He masters the skill of strategic management, also being certified in it from IIMA. He has challenged his challenges and contributed his efforts in this journey of digital transformation.
Prasad Pimple has a decade-long experience in the Life insurance sector and as EVP, Kotak Life heads Digital Business. He is responsible for developing user friendly product journeys, creating consumer awareness and helping consumers in identifying need for life insurance solutions. He has 20+ years of experience in creating and building business verticals across Insurance, Telecom and Banking sectors
Ref. No. KLI/22-23/E-BB/2435
The information herein is meant only for general reading purposes and the views being expressed only constitute opinions and therefore cannot be considered as guidelines, recommendations or as a professional guide for the readers. The content has been prepared on the basis of publicly available information, internally developed data and other sources believed to be reliable. Recipients of this information are advised to rely on their own analysis, interpretations & investigations. Readers are also advised to seek independent professional advice in order to arrive at an informed investment decision. Further customer is the advised to go through the sales brochure before conducting any sale. Above illustrations are only for understanding, it is not directly or indirectly related to the performance of any product or plans of Kotak Life.
