What is a No-Claim Bonus in Health Insurance?

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A no-claim bonus is a lucrative benefit offered to the policyholder in their health insurance policy. It is a modest way in which the insurer rewards the insurance holder for having a claim-free year. Moreover, a no-claim bonus is considered one of the most significant factors to consider while purchasing a health insurance plan in India. Let’s read further to know in detail about No-claim Bonus and what is its importance.

What are the Types of No-Claim Bonus?

In a health insurance policy, generally, there are two different ways the no-claim bonus works, these are:

Cumulative Benefit Means a Higher Sum Insured

Under this benefit, if the policyholder has a claim-free year, then the coverage amount of the policy increases; however the amount of premium of the policy remains the same.

For instance, if an individual purchases a health insurance plan of Rs.5 lakh and the insurance company provides a no-claim bonus of 5% for every claim-free year. Thus, if the policyholder has not made any claim for the first year of the policy then the coverage amount of the policy will increase up to Rs.5.25 lakh; however, the premium rate of the policy will remain the same. Similarly, if the policyholder does not file any claim for the two consecutive years, then the coverage amount of the policy will increase up to Rs. 5.5 lakh and so on in return for the same premium rate. This means that in case the insured person gets hospitalized in the 3rd year then he/she can file a claim up to Rs.5.5 lakh.

Discount on Premium

Under this option of no-claim bonus, the premium rate of the policy decreases by a specific percentage for every claim-free year, however, there are no changes made in the coverage amount of the policy.

For example, if an individual purchases a health insurance plan in India for a coverage amount of Rs.5 lakh in exchange for the premium of Rs. 10,000 annually. And, the insurance company offers a discount of 5% on the premium amount for a claim-free year as a no-claim bonus, then at the time of policy renewal the insured person will have to pay Rs.9,500 as a premium for their policy. Although, the coverage of the policy will remain the same.

In both ways, the policyholder can ensure better financial protection for their family and themselves at the time of any medical emergencies. The benefit of a no-claim bonus encourages the policyholder to stay healthy and fit and only file a claim when it is very much required. The benefit of a no-claim bonus is offered in individual and family health insurance by most of the health insurance companies in India. However, the terms and conditions of the policy of the respective insurer influence the premium discount or amount of cumulative bonus.

The Coverage Amount can be Increased to a Certain Limit Through No-Claim Bonus

Although the policyholder can avail the advantage to increase the coverage amount of the policy through the option of a cumulative no-claim bonus, it can be done up to a certain limit. Generally, the limit of the coverage amount can be increased between 50%-100%. Moreover, the terms and conditions might vary for the different insurance providers.

For instance, let’s say a person has a health insurance policy of Rs.2 lakh and the health insurance company offers a cumulative no-claim bonus of up to 50%, then the coverage amount of the health insurance policy will be increased by Rs.1. lakh that is from Rs. 2lakh it will increase up to Rs.3 lakh and not more than that.

The Advantage of NCB is Applicable for Individual As Well As Floater Health Insurance Plans in India

Under the individual health insurance policy, the coverage is offered only for the policyholder, whereas the floater health insurance policy provides coverage for the entire family. So, irrespective of whether one has an individual health insurance plan or a floater health insurance plan that covers all the family members, the policyholder can avail the benefit of a no-claim bonus if he/she does not make any health insurance claim for an entire policy year.

The Facility of No-Claim Bonus is Not Offered by All Health Insurance Plans in India

Not every health insurance plan in India offers the facility of a no-claim bonus. Also, the plans that offer the facility of the no-claim bonus have their terms and conditions. Thus, it is very crucial to read the documents of the policy in detail while purchasing the policy so that one can know whether the policy offers the no-claim bonus facility or not. Also, while purchasing the policy make sure that you know what are the terms and conditions of the policy if it offers NCB like how much the policy coverage can be increased, what is the % of NCB etc.

NCB in a health insurance policy is one of the most important aspects to consider while purchasing the plan in India. Thus, while comparing the plan, the policy buyers should go through the terms and conditions of NCB, and choose the one as per their requirement.

Wrapping it Up!

In this day and age, the mushrooming cost of medical treatment and hospitalization has made it extremely difficult for the common public to avail of the right medical facility. Under a situation like this, the advantage of a no-claim bonus is a lucrative way to enhance the health insurance coverage and ensure the safety of the family and loved ones against any type of medical emergency.

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