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All You Need To Know About No-Claim Bonus In Health Insurance

The incentive your insurance company gives you for a year without filing a claim is known as a no-claim bonus. To enhance your total covered, choose an NCB health insurance plan that offers the greatest No Claim Bonus/Cumulative Bonus for each year without a claim.

  • 3,685 Views | Updated on: Dec 29, 2023

A health insurance no-claim bonus is a perk offered to the policyholder in their health insurance contract. The insurance provider compensates the policyholder in a modest way, often referred to as NCB, for a year without filing a claim. If no claims were made during the prior insurance period, the insured would receive a financial benefit under this benefit. The health insurance no-claim bonus is, therefore, among the most important variables to consider when buying a health insurance plan in India.

What Are the Types of No-Claim Bonus?

There are typically two main sorts of health insurance no claim bonus in a health insurance policy.

Cumulative bonus

This benefit raises the coverage amount or sum insured of the policy 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 a change in premium cost. Similarly to this, your policy’s coverage amount will rise by 5% if you go two years without filing a claim.

Discount on premium

For each year without a claim, the renewal premium rate for the insurance is reduced by a predetermined percentage under this form of no-claim incentive. 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.

How is No Claim Bonus Beneficial?

Consider these explanations for why no claim bonus is a valuable perk for policyholders.

1. No Claim Bonus enables you to better secure your family’s and your own finances in the event of a medical emergency.

The cost of renewing the health insurance policy is reduced by receiving more coverage at a lower cost.

2. A no-claims incentive encourages policyholders to stay in the good physical condition and to file claims only when absolutely necessary.

3.No claim bonuses are offered by the majority of Indian health insurance companies for both individual and family policies. The terms and conditions of the policy, however, may vary from one insurer to the next.

How Much Will the Sum Insured Increase under Cumulative Bonus?

Although the policyholder has the option to use a cumulative bonus to raise the policy’s sum insured, they are only able to 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.

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

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 health insurance plan or a floater health insurance plan, you can benefit from a no-claim bonus.

Are No Claim Bonuses Available in All Indian Health Insurance Plans?

No. Not all health insurance plans in India include the no-claims bonus feature. Plans with no claim bonuses have their own set of rules and regulations. To determine if insurance offers the no-claim bonus feature or not, it is imperative that you carefully study the policy terms before purchasing the policy.

Additionally, ensure you comprehend the policy’s terms and conditions as they relate 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

Wrapping up

Today’s common man finds it incredibly challenging to access the best medical facilities due to the skyrocketing expense of medical care and hospitalisation. 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, don’t forget to read the policy documentation and comprehend the NCB terms.

Key takeaways

Why policyholders should value the no-claims bonus.

  • In the case of a medical emergency, the No Claim Bonus enables you to better protect your family’s and your personal financial security.
  • The cost of renewing the NCB health insurance policy is reduced by receiving more coverage at a lower cost.
  • A no-claims incentive encourages policyholders to stay in the good physical condition and to file claims only when absolutely necessary.
  • No claim bonuses are offered by the majority of Indian health insurance companies for both individual and family policies. The terms and conditions of the policy, however, may vary from one insurer to the next.

- A Consumer Education Initiative series by Kotak Life

Amit Raje
Written By :
Amit Raje

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.

Amit Raje
Reviewed By :
Prasad Pimple

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

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