No Claim Bonus in Health Insurance

A No-Claim Bonus, also known as NCB, is a benefit that policyholders are entitled to enjoy for not making any health insurance claims. It allows policyholders to enjoy discounts on premiums or additional health insurance coverage. 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.

When you get health insurance, you do not always use it every year. In some years, you might have excellent health, and in other years, the hospital bill might have been so negligible that it could have been paid out of your pockets. Such years of zero claims make you eligible for a No-Claim Bonus.

Suppose you have a health insurance policy of ₹5 lakhs. Your insurer is offering you a cumulative NCB of 10% for every claim-free year. The maximum NCB cap provided by your insurer is 50%.

Year-wise Breakdown

1st claim-free year

• NCB: 10% of ₹5 lakhs = ₹50,000
• Total Sum Insured: ₹5,00,000 + ₹50,000 = ₹5,50,000

2nd claim-free year

• NCB: 20% of ₹5 lakhs = ₹100,000
• Total Sum Insured: ₹5,00,000 + ₹1,00,000 = ₹6,00,000

3rd claim-free year

• NCB: 30% of ₹5 lakhs = ₹1,50,000
• Total Sum Insured: ₹5,00,000 + ₹1,50,000 = ₹6,50,000

4th claim-free year

• NCB: 40% of ₹5 lakhs = ₹2,00,000
• Total Sum Insured: ₹5,00,000 + ₹2,00,000 = ₹7,00,000

5th claim-free year

• NCB: 50% of ₹5 lakhs = ₹2,50,000
• Total Sum Insured: ₹5,00,000 + ₹2,50,000 = ₹7,50,000

• Cumulative Bonus: Under this type of NCB, your insured sum increases by a certain percentage for each claim-free year. 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: Another way to enjoy your no-claim bonus is by enjoying a discount on the premium of your health insurance policy. This brings down your premium amount without tampering with your insured sum. 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.

Also Read: Cumulative Bonus in Health Insurance

• Premium Discount: Policyholders not filing a claim for the whole year enjoy a discount on their premium at the time of renewal. For example, a 20% NCB would reduce your premium rate by that percentage.

• Increased Sum Insured or Cumulative Bonus: NCB can increase the policy sum insured without affecting the premium. This provides better coverage without spiking your yearly premiums.

• Financial Protection: The No Claim Bonus(NCB) offers financial protection by increasing your sum insured at no extra cost for each claim-free year, helping cover higher medical expenses without added premium, especially valuable as healthcare costs continue to rise.

• Incentive for Healthy Living: The NCB for health insurance encourages policyholders to improve their health and avoid unnecessary medical claims. This increases their chances of enjoying discounted premiums or better coverage.

• Portability: In some cases, if you choose to switch your insurance company, your NCB can also be transferred so that you can continue to enjoy its benefits even with your new insurer.

• Reward for Caution: The NCB acts as a reward for staying healthy and cautious, offering discounts on your premium for every claim-free year, which can lead to significant long-term savings.

• Cumulative Benefits: NCB benefits can accumulate over time, providing better coverage in the future.

• Enhanced Coverage: One key advantage of the best No Claim Bonus in health insurance is the ability to lower your premium costs year after year for maintaining a claim-free record. It adds value by making your policy more cost-effective without reducing your protection, even as medical costs continue to rise.

• Reward for Healthy Life: An NCB bonus is an incentive provided to insurance holders for not making unnecessary claims by maintaining a healthy lifestyle.

• Portability: NCB in health insurance can be transferred when changing insurance companies. Your insurer transfers your no-claim bonus along with all your files to your new insurance provider.

Also Read: Do’s and Don’ts of Saving Money on your Health Insurance Policy

• Choose the Right Plan: Opt for a plan that offers the best health insurance bonus upon no claim. Always check the insurance provider's NBC cap when settling on a plan.

• Maintain a Healthy Lifestyle: Incorporate healthy practices in your life to avoid making irrelevant claims. Regularly working out, having a balanced diet and going for routine health check-ups can help you live a fit and healthy life.

• Be Aware of Exclusions: Carefully review all the exclusions in your policy to avoid being caught off guard when filing claims. Knowledge of exclusions helps you make better decisions about how to use your bonus.

• Renew Your Policy On Time: Always renew your policy before the due date. Missing your renewal date not only jeopardises your NCB but can also result in penalties and late fines.

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 is capped between 50% and 100% of the actual sum insured.
So, if you do not file a claim for a few consecutive years, your insured sum 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 insured sum will increase by ₹1 lakh to become ₹3 lakhs. It will not go beyond this limit.

N.B., 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 during your 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 transferable. 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 In India Provides the NCB Benefit

It is crucial to read the policy documents carefully and check whether the insurer offers an NCB benefit. 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

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. With TATA AIG's health insurance policies, policyholders get rewarded with bonuses of up to 50% for maintaining a claim-free record.

Worried about rising medical expenses? TATA AIG’s cashless health insurance, you need not worry about paying the hefty hospital bills from your pocket. Get treated at any authorised hospital of your choice across the country, and TATA AIG will directly settle your medical bills with the hospital.

Whether you're looking out for yourself, your family, or planning for critical illness care, our plans are built to offer the right mix of protection and convenience. Stay covered, stay stress-free, and focus on what matters most—your health..