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No-Claim Bonus (NCB) in Health Insurance Policy: All you need to know
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What is no claim bonus in Health Insurance? Here’s all you need to know about

The importance of a health insurance policy can’t be described in a single word as it offers coverage and financial security to your family in case of any financial turbulence. Once you have purchased a health insurance policy from an eminent insurer, you need to pay the premium amount every year to enjoy the benefits and coverage of the policy. In case of any medical emergency, you can make a claim to the insurance company, and the insurer will reimburse you. But if you don’t make any claim within a financial year, the insurance company will reward you with a lucrative incentive known as No Claim Bonus in health insurance.

What is no claim bonus in health insurance?

In health insurance, no claim bonus is when policyholders receive rewards from the insurers for completing a claim-free year. Understanding no claim bonus in health insurance is imperative while purchasing a health policy from an insurance company.

Here, we are going to discuss how no claim bonus works in a health insurance policy.

No claim bonus in health insurance

There are two types of no-claim bonuses (cumulative bonus and discount in premium).

Cumulative Bonus

If you didn’t make any claim in a financial year, your coverage amount will be enhanced, but the premium amount will remain the same. This is known as a cumulative no-claim bonus. 

Suppose you have purchased a health insurance policy of Rs 5 lakh and your insurance company offers a 5% no claim bonus for every financial year if there is no claim. So, if you didn’t raise any claim, then, in the first year, your coverage amount would enhance to Rs 5.25 lakh (without an increase in the premium amount). If you didn’t make any claim for two consecutive years, your coverage amount would be Rs 5.5 lakh and so on. If you need any hospitalization in the third year, you can claim up to Rs 5.5 lakh. 

Discount on Premium

Your premium amount reduces by a certain percentage for every claim-free year (without changing the coverage amount). This is known as a discount on premium no claim bonus.

Suppose you need to pay Rs. 10,000 per year as you have purchased a health insurance policy of Rs 5 lakh. For every claim-free year, your insurance company rewards you with a discount of 5% as no claim bonus. If you didn’t raise any claim in the first year, your premium amount would come down to Rs. 9500 during the policy renewal. But the coverage amount will be unaffected.

No claim bonus is beneficial for policyholders as it helps them to strengthen their financial protection and security. Among these two, cumulative no claim bonus is more popular and applauded by policyholders. As a result, most insurance companies usually offer cumulative no-claim bonuses to their policyholders.

4 things you should know about no claim bonus

1. NCB is applicable for both individual and floater plans

Both individual health insurance plans and family floater insurance plans are eligible for no claim bonus. For example, if you have an individual health insurance policy and you didn’t raise any claims throughout the year, you will be eligible for no claim bonus from the insurer. On the other hand, if you are covered with a family floater insurance policy and no family member made any health insurance claim for a year, then they will get no claim bonus in the next year.

2. You can only enhance a limited coverage through cumulative no claim bonus

With a cumulative no claim bonus in health insurance, you can enhance the coverage amount. But there is a limit to this. The limit range is between 50 to 100% of the original sum insured and the terms and conditions are not the same for all insurance companies.

You have purchased a health insurance policy of Rs 2 lakh, and your insurance company allows up to 50% enhancement through a cumulative no claim bonus. That means you can comfortably enhance your coverage amount by another Rs 1 lakh, i.e., from Rs 2 to 3 lakh, but not beyond that.

3. Not every health insurance policy offers no claim bonus

Though no claim bonus is a common way of rewarding policyholders from health insurance companies still, not all health insurance policies offer a no claim bonus to customers. Health insurance policies that offer no claim bonus have their own terms and conditions. So, before investing a single penny, go through your health insurance policy thoroughly and check whether or not it offers no claim bonus. If the policy offers no claim bonus, then check the terms and conditions. Check certain conditions like the percentage of no claim bonus, the increased coverage amount, etc., before making the final call.

4. NCB can be transferred to the new insurer

Customers who are not satisfied with their present insurance companies and want to port their policies to another company can also transfer their NCB to the new insurer. But to enjoy the benefits of no claim bonus, the policyholder should renew the policy within the renewal date. Most insurance companies offer a 30-days grace period once the customers miss their renewal date. If the policyholders still fail to renew their health policies during this grace period, they can’t enjoy the benefits of NCB.

No claim bonus in health insurance means a lot to policyholders while purchasing a health insurance policy. If you compare health policies from various insurance companies, closely monitor the terms and conditions for no claim bonus. Select the best policy that meets all your needs and requirements. The cost of medical care is thriving day by day, thus to combat this evolving cost, a no claim bonus in Mediclaim is the utmost way to secure your family’s financial needs under any emergency.