No Claim Bonus in Health Insurance

The No Claim Bonus in health insurance is a reward for maintaining good health and not utilising insurance coverage for medical expenses.

The bonus is usually provided in the form of a discount on the premium for the next policy period or an increase in the sum insured without an increase in the premium amount.

The idea behind the No Claim Bonus is to encourage policyholders to stay healthy and avoid unnecessary claims. It is a way for insurance companies to appreciate and reward individuals for taking preventive measures and maintaining a healthy lifestyle.

Keep in mind that the specifics of the No Claim Bonus can vary between insurance companies and policies, so it is essential to review the terms and conditions of your specific health insurance policy.

Cumulative Bonus

Under the cumulative bonus benefit, your insurance provider increases your policy’s coverage amount or sum insured for every no-claim year while keeping the policy premium the same.

Example:

Suppose you buy a health insurance policy of ₹10 lakhs with a cumulative bonus of 5% at a premium of ₹10,000. The sum insured will rise to ₹10.5 lakh (₹10 lakh+ 5% of ₹10 lakhs = ₹10.5 lakhs) if you do not raise any claim in the first policy year, while the premium will stay the same.

Discount on Premium

Under discount on premium benefit, the premium of your health insurance policy decreases for every no-claim year while the sum insured remains the same. So, you benefit by paying a lower premium for the same sum insured.

Example:

Let’s assume you purchase a health plan of ₹5 lakhs at a premium of ₹10,000 per year. Your insurance provider promises to offer a discount of 5% on the premium for every claim-free year. The premium will be reduced to ₹9,500 (₹10,000 - 5% of ₹10,000 = ₹9,500) for the same sum insured if you do not raise any claim in the first policy year.

NCB is beneficial for both the insurance companies and the policyholders. Due to the NCB benefit, you may not file a claim for minor expenses. Your insurance provider stands at an advantage as a result.

So, it rewards you in the form of reduced premiums or a higher sum insured. Here’s a list of advantages of health insurance no claim bonus:

NCB health insurance is an added advantage to your health policy. It allows you to avail enhanced financial security for yourself and your loved ones in times of medical crisis

Since NCB is offered for claim-free years, it encourages you to stay healthy so that there is no need to file a claim until necessary

NCB is an effective way of reducing the cost of health insurance renewal. You can avail higher sum insured at a lower premium

Here are a few essential things you must know about health insurance no claims discount:

There is a limit to the NCB benefit

NCB in health insurance has a maximum limit that may vary according to insurance providers. Usually, the NCB amount in health insurance is capped between 50%-100% of the actual sum insured.

So, if you do not file any claim for a few consecutive years, your sum insured will increase by a maximum of 50%-100%.

For example, you purchase a health plan of ₹2 lakhs. Your insurance provider allows for a 50% rise in the sum insured through the cumulative bonus. As a result, your sum insured will increase by ₹1 lakh to become ₹3 lakhs. It will not go beyond this limit

**NCB is available under individual and family floater plans

Both individual and family floater health insurance plans provide an NCB benefit. While an individual health plan covers only you, a family floater plan covers your entire family. You can benefit from NCB if you do not make any claim in the previous health policy tenure.

Similarly, if no family member files any claim for an entire policy year, they are also entitled to get the NCB benefit in the next year

NCB is transferable

NCB in medical insurance is transferrable. So, if you have earned the bonus on a particular health plan, you can transfer the benefit to a new plan if you want to switch to a new policy or insurance company

Not every insurance company offers NCB benefit

Not every insurance company in India provides the NCB benefit. It is crucial to read the policy documents carefully and check if the insurer offers an NCB benefit or not. If there is an NCB provision, check the maximum limit.

You can compare different health plans based on this and buy the best one for yourself and your loved ones

What is Cumulative Bonus in Health Insurance

As we saw above, the cumulative bonus is a type of NCB in health insurance. A cumulative bonus in health insurance is a reward provided by an insurance policy for every claim-free year by means of an increase in the sum assured.

With each consecutive year without filing a claim, the cumulative bonus adds a predetermined percentage or fixed amount to the policy's sum assured. This bonus acts as an incentive for policyholders to prioritise preventive care and wellness, fostering a proactive approach to health management.

It serves as a financial benefit by enhancing the coverage over time, offering additional protection against rising medical costs and unforeseen health challenges for policyholders who consistently maintain a claim-free record.

Tata AIG NCB in Medical Insurance: How Does it Work

Cumulative bonus in Tata AIG health insurance is available through the Tata AIG MediCare Premier health insurance policy.

Let us illustrate the process with Asmita's situation.

Asmita has chosen a policy that provides coverage of ₹5,00,000 and a cumulative bonus of 50% upon renewal, with an upper limit of 100% of the total sum insured.

As Asmita did not file any claims in the initial policy year, an additional ₹2,50,000 was added to her sum insured during renewal, bringing it to ₹7,50,000.

Assuming she refrains from filing a claim in the subsequent year, her insured sum will once again increase by ₹2,50,000, reaching a total of ₹10,00,000. This increment halts at 100%, which is the maximum limit.

**What will happen if Asmita submits a claim in the second year? **

The cumulative bonus will go down by 50% at the time of policy renewal.

However, before making any claims, consider the magnitude of the expense and whether it is necessary to file a claim.

If not, you can preserve your bonus. Unwarranted claims can impact your No-Claim Bonus and the total sum insured. The positive aspect is that it remains unaffected by OPD dental care, shared accommodation, health check-ups and vaccination benefits.

Tata AIG provides medical insurance tailored to suit your needs. Our health insurance plans include individual and family health insurance, critical illness insurance and more.

So, don’t delay and pick the best health insurance plans for yourself and your loved ones at budget-friendly rates.

Medical inflation has increased the prices of healthcare services to a great extent. As a result, availing quality medical services at affordable costs has become challenging. Medical insurance is an effective way to secure yourself against medical inflation financially.

NCB is an essential aspect that adds an extra layer of benefit to your health plan. It boosts your health insurance coverage in the long run or reduces the premium.

However, ensure to raise a claim only when it is required and not ask for compensation for minor expenses to benefit from NCB.