A cumulative bonus is a type of bonus in insurance offered by insurers to the policyholders for not making any insurance claims. It is a kind of reward for the insured that is given for staying healthy and varies from 5% to 50%.

If you have earned a cumulative bonus, you have two options to redeem it. Firstly, you can claim it by way of a premium discount and pay a lesser premium on policy renewal. Or, you can opt for increasing the sum insured of your insurance plan.

A cumulative bonus in health insurance is beneficial to both the insured and the insurer. Since it has a lucrative aspect, it encourages policyholders to refrain from making any small claims. When the insured does not make any claim, the insurer’s liability is automatically reduced and their financial obligations are reduced.5

Every insurer has different terms and conditions based on which they decide to provide you with the benefits of a cumulative bonus. If you have insurance or are planning to buy health insurance online, knowing the types of bonuses is crucial.

• Discount on Premium: Many insurers offer a bonus in reduction of premiums to the policyholders if they do not make any claims in a year. Thus, while the benefits and coverage of the insurance policy remain the same, you pay a lower premium amount in the subsequent year.

• Increasing the Sum Insured: You may also receive the cumulative bonus benefit by way of an increment in the sum insured. Under this type of bonus, the insurer increases the total sum insured or the coverage amount if you have not made any insurance claims in the previous year.

• Fixed Amount Bonus: A few insurance providers also offer a cumulative bonus as a fixed amount instead of a percentage. It is beneficial if you are looking for an increment in your coverage without any percentage. For example, the insurer may offer a bonus of 25,000 or 40,000, etc.

A cumulative bonus plays a crucial role in encouraging individuals to maintain their health. It rewards healthy behaviour by way of a bonus in reduction of premiums, leading to insurance affordability, fostering preventive healthcare and enhancing insurance effectiveness.

For example, you take an insurance coverage of 10,00,000. The insurer offers a cumulative bonus of 10% for each claim-free year, increasing the sum insured by up to a maximum of 50%. Here is how the cumulative bonus will add up.

Note: In most cases, if the policyholder makes a claim, the insurers may set the sum insured to the original limit (in this case, it is 5,00,000). However, some insurers may only reduce the bonus portion.

Another way insurers offer a cumulative bonus is through a discount on the insurance premium. For example, the insurer offers a premium discount of 10% for each claim-free year. If your insurance premium is 5000, here is how it will work.

• Financial Benefit: The most basic benefit of a cumulative bonus is that it offers a financial benefit by way of enhanced sum insured or a discount on the insurance premium. In the event of an enhanced sum insured, you receive an additional financial benefit in the event of a medical emergency. On the other hand, if there is a discounted premium, you can save money by paying a lesser amount.

• Enhances Affordability: Health insurance online with a cumulative bonus enhances the affordability of health insurance amid soaring inflation. An increased sum insured or a discounted premium both make insurance more affordable for policyholders.

• Encourage Health Prioritisation: A bonus acts as an incentive, rewarding healthy individuals who keep themselves healthy and do not raise any insurance claims. Thus, it encourages the insured community to prioritise their health and stay healthy. It creates a positive cycle where you stay healthy and get rewarded for the same.

• Long-Term Relationships: When the insurers reward the policyholders for healthy behaviours, it encourages them to continue being insured with the same insurer, fostering long-term relationships. When you stay insured with the same insurer for a long time, it also brings about additional services and benefits.

• Your Claim History: The cumulative bonus in health insurance is a reward for claim-free years. Thus, your claim history is the primary factor that decides whether you are eligible for the bonus or not. If you have not raised any claims in the past years, you can earn the cumulative bonus. However, if you make any claims, you lose the bonus.

• Insurer Terms: Each insurer has specific terms and conditions which decide the cumulative bonus amount or percentage. Most insurance caps the limit at 50%-100% of the original sum insured. Thus, once you reach the maximum limit, you no longer get a cumulative bonus, even for claim-free years.

• Cumulative Bonus Type: Some insurers offer a cumulative bonus as an increment to the sum insured, while others offer it as a discount on the premium. Based on what the insurer offers, your cumulative bonus may vary.

• Renewal Terms: At times, your insurance providers may modify the insurance terms or update the policy. In such situations, it may impact the bonus percentage or amount, as the case may be.

• Insurance Portability: If you port your insurance to another insurer, it may affect your cumulative bonus. Some insurers may allow the entire bonus to be carried forward, while others may only allow partial transfer. Thus, your bonus may be reduced in some cases.

• On-Time Renewal: Renewing your insurance plan on time is essential if you want to continue enjoying the benefits and rewards. A delay in policy renewal beyond the grace period may cause the policy to lapse and you may also lose the insurance benefits.

Keeping your cumulative bonus intact can help in increasing your insurance coverage significantly without paying anything extra. Here are some real-life tips to keep the bonus flowing year after year.

• Preventive Healthcare: Prioritise your health by following healthy habits and regularly monitoring your vitals. Such a practice ensures that any health-related issues are detected early on, reducing the chances of hospitalisation and subsequent medical claims. When claims are prevented, you can earn the cumulative bonus on your insurance.

• Do Not Claim Small Medical Expenses: If a small medical expense arises, try to pay it from your own pocket instead of raising a claim. It will help you to reserve your CB amount in health insurance and reap greater benefits in the future.

• Use Other Features of the Insurance Policy: Many insurers offer add-on coverage and wellness benefits separately, such as wellness programs, teleconsultations, outpatient coverage and so on. Consider using them for petty expenses instead of using the base plan to keep the bonus alive.

• Choose Plans with CB Retention: Some insurers offer insurance plans with add-on cover or features to retain your cumulative bonus despite making a claim. By opting for such riders or insurance plans, you can ensure that the bonus remains intact even if you have to make a claim.

TATA AIG resonates with the needs of the insured to save premiums and get maximum benefits from their sum insured. In this regard, it provides the best health insurance policy and a cumulative bonus feature, assisting you to achieve your financial and wellness goals.

You can choose from various health insurance plans, such as TATA AIG Medicare Premier, TATA AIG Medicare Select, TATA AIG Eldercare, etc. All these plans offer a cumulative bonus option, making them highly beneficial for you.

Besides, we also provide you with the freedom to either opt for an increment in the sum insured or get a discounted premium on renewal, referred to as a no-claim bonus in health insurance. Thus, you can make the choice and select an option that aligns with your goals.

You can find out detailed information about the cumulative bonus under our health insurance online by reading the policy documents or contacting the customer assistance team.

The cumulative bonus in health policy is a highly advantageous feature that brings coverage or discount benefits to you as an insured. Apart from being a reward, it represents a commitment to long-term financial prudence and wellness.

Whether you opt for a cumulative bonus in the form of reduced premium or an increment in the sum insured, it proves to be beneficial in both cases. However, it is essential that you be cautious and take the necessary steps to preserve your cumulative bonus in health insurance.