No-claim bonus refers to the bonus amount that gets accumulated to the sum insured amount for every claim-free year. In other words, it is the reward offered by the insurer for not making any claim during a particular policy period. It is estimated that medical inflation is rising at the rate of 15% to 20% every year. With this drastic rise in medical costs every year, the no-claim bonus benefit offered by a health insurance policy can be extremely helpful in covering additional medical costs incurred during an unexpected hospitalisation.
No-claim bonus typically comes in two different forms.
No-claim bonus (NCB) is a common thing in health insurance. The type of NCB offered and the discount rate provided vary from one insurer to another. However, almost all health insurance service providers in the country offer NCB benefit in one form or another. NCB is one of the ways which an insurer can reward a policyholder for staying healthy and not making frequent claims.
When it comes to health insurance, cumulative benefit is the most common form of NCB benefit offered to policyholders. However, certain state-owned insurance service providers like Oriental Insurance provide NCB in the form of premium discounts on policies for every claim-free year.
Most of the private health insurance service providers in the market offer cumulative benefit to their customers. In cumulative benefit, a significant percentage is added to the sum insured amount for every claim-free year. However, there is a specific limit on the maximum amount that can be obtained as no-claim bonus. Typically, most health insurers allow up to 50% on cumulative NCB.
Now that we have understood what no-claim bonus means, let’s check out how it works with a simple example. A person has a health insurance policy for Rs.2 lakh. The insurer offers 5% of cumulative NCB for every claim-free year with a maximum of 50%. The total sum insured available after the end of every claim-free year can be given as follows.
Sum insured available after 1 claim-free year = Rs.2 lakh 10 thousand
Sum insured available after 2 claim-free years = Rs.2 lakh 20 thousand
Sum insured available after 3 claim-free years = Rs.2 lakh 30 thousand
Here, the maximum cumulative benefit available on sum insured is capped at Rs.3 lakh (50% of the original sum insured amount). The insured can obtain maximum coverage as per the new sum insured amount every year.
Some of the key features of NCB available in health insurance can be listed as follows.
*You can check with your insurer to know how much of the cumulative bonus will be lost after filing a claim.
All health insurance companies offer a fixed percentage for no-claim bonus. However, some insurers offer an add-on cover to boost the percentage offered as NCB. Some add-on covers can help boost NCB up to 50% in a single year. There is typically a limit on the maximum amount that can be obtained as NCB. For instance, the No Claim Bonus Super add-on cover offered by Religare provides 50% boost of the sum insured in a single year. The maximum limit here is capped at 100% of the sum insured.
No, the benefits will not be lost but the amount or percentage may be affected based on whether you switch from individual to floater or floater to individual and whether your sum insured amount was increased or not.
Generally, only previously insured members of the policy will enjoy the no-claim benefits. The new members will have to complete a claim-free year to avail the benefits.
The no-claim benefit is generally transferred to the new policy if the member chooses to port to another insurance company’s policy. If the insured does not renew the policy, he/she will lose out on the benefits. Hence, there is no question of transfer of benefits to the new insurer as there are no benefits to be transferred.
Most insurance companies specify a limit under the no-claim bonus clause. The maximum discount on the premium amount or an increase in the sum insured amount will depend on the limit specified.
Yes, certain insurance companies offer add-ons for the cumulative bonus which increase the benefit provided to the insured member.