No Claim Bonus in Health Insurance: Understand Its Types, Features, and Benefits

 

In today’s world, health insurance is a necessity owing to spiking expenses in the healthcare sector. Given this scenario, no claim bonus in health insurance is a crucial benefit for policyholders. 

Provided as a benefit to existing customers, a no-claim bonus rewards you financially for maintaining good health and for not raising a health insurance claim. If this term is new to you, keep reading this blog till the end to know everything about these bonuses. 

What Is a No Claim Bonus?

No claim bonus in health insurance is a financial reward that insurers offer to policyholders for maintaining good health for a year. This means that every year a person does not claim health insurance, he/she will receive discounts on premiums or additional insurance coverage. 

Thus, a no-claim bonus in health insurance plans tends to motivate policyholders to maintain good health to spend the most possible claim-free years. 

Types of No-Claim Bonus

You can classify health insurance no claim bonus in two categories. The types of no-claim bonuses are as follows. 

• Discount on Premium

By choosing this type of no-claim bonus, the premium of your policy renewal decreases by a specific percentage for every year you do not file claims. Nevertheless, even when your premium decreases during renewal, the sum insured amount remains the same. 

• Cumulative Bonus

On the other hand, under cumulative bonus, for every claim-free year on your health insurance policy, your sum insured or coverage amount increases by a certain percentage. However, your premium amount will remain the same. 

How Does No Claim Bonus Work? 

To understand the workings of each type of no-claim bonus in health insurance, let’s take a look at some examples. 

• Working of No Claim Bonus for Discount on Premium

Let's assume, Rahul purchased a health insurance policy with a sum insured of Rs. 5 lakh and paid a premium of Rs. 5,000 towards it. During the policy period, he raised no claim. Now, the insurer will offer him a 10% discount as a no-claim bonus. Consequently, Rahul has to pay Rs. 4,500 to renew his plan for the next year saving him Rs. 500. 

• Working of No Claim Bonus for Cumulative Benefit

In this option, if Rahul does not raise a claim for his health insurance, the insurer will boost his sum insured by 10% during renewal. After this, his sum insured amount will become Rs. 5,50,000.

If he does not claim his insurance for the following year as well, he will get another cumulative boost on health insurance. This will make his new sum insured for the following year to Rs. 6,00,000. However, it is also important to note that many insurers set a limit for the number of times the sum insured amount can be increased. 

In Rahul’s case, his insurer offers a maximum of 50% boost of the original amount. Therefore, the final sum insured will be Rs. 7,50,000 for five consecutive claim-free years. 

Features of No Claim Bonus in Health Insurance

Here are some important features of no claim bonus in health insurance that you must know. 

• Bonus Rate for No Claim Bonus 

The bonus rate that Indian insurance companies offer as a reward for your claim-free years might range from 5% - 20%. 

• Benefit for Family Floater Policy

Any of the family members in a family floater policy can avail a no-claim bonus for the sum insured for claim-free years. 

• Stays Unaffected After Switching Insurer

You do not have to worry about losing your accumulated no claim bonus in case of switching insurers.  In such instances, your accumulated no claim bonus amounts will stay active. 

Benefits of No Claim Bonus

Here are some noteworthy benefits of no claim bonus in health insurance policies that you must know before making a purchase. 

• The no-claim bonus reduces your policy renewal expense as a reward for going claim-free in a year. Alternatively, it offers you better coverage than your initial purchase. 

• If your hospital bill is small and manageable, you can pay it yourself without raising a claim. This will help you enjoy cumulative benefits on your health insurance plan. 

• You can save money by paying a lesser premium for going claim-free while renewing the plan. Also, you can opt to boost your sum insured and have more money to cover your medical expenses for the future without incurring extra expenses. 

• No claim bonus encourages policyholders to look after their health and avoid filing claims unless a major emergency arises to receive this monetary reward. 

• It ensures better financial protection for you and your family in times of medical emergencies. 

Add-on Cover for No Claim Bonus in Health Insurance

Some insurance companies offer the no-claim bonus as an add-on cover to their policyholders.  In this case, you will need to buy the rider by paying an additional premium. With a no claim bonus rider with your health insurance plan, you can avail the rewards even after filing claims on your health insurance. 

To know whether your issuer offers health insurance with no claim bonus add-on, consider reading the terms and conditions of the policy carefully before buying. 

How Much Will the Sum Insured Increase Under Cumulative Bonus?

As stated earlier, the no claim bonus helps increase your sum insured as a reward for your claim-free years. However, issuers can offer this cumulative bonus to boost your sum insured only up to a certain limit. 

The terms and conditions for no claim bonuses on the sum insured amount can vary among insurance providers. However, it is seen that most insurers increase coverage amounts up to 50% to 100% of the original value under cumulative bonus. 

Does the No Claim Bonus Apply to Both Individual and Family Floater Plans?

In India, no claim bonus is available for both individual and family floater health insurance policies. For the former, the sum insured covers the medical necessities of one person who is the only policyholder. However, for the latter plan, the sum insured covers the policyholder and his/her family members. 

In the case of both of these plans, your insurer will reward you with no claim bonus in health insurance for every cumulative claim-free period. 

Is There a No Claim Bonus for All Indian Health Insurance Plans?

If you are wondering if every health insurance plan in India offers no claim bonus, you might be wrong. Not all health insurance issuers reward their policyholders with this feature for not raising a claim. Only certain insurance companies allow this benefit and have terms and conditions subjective to themselves regarding this claim.

Therefore, you must research the different options available in the market to choose a policy that offers you the facilities and coverage you want.

Summing Up

A no claim bonus in health insurance motivates policyholders to maintain a healthy lifestyle. This enables them to reap rewards from insurance companies for not raising a health insurance claim for as long as possible. No claim bonus is also good for your finances as it can either boost your sum insured or reduce your yearly premiums.

To know more about no claim bonus on your medical insurance plan, consider reading the terms and conditions of the policy thoroughly.

FAQ's on No Claim Bonus in Health Insurance

Q. How does no claim bonus work in health insurance?

For each claim-free year after purchasing a health insurance policy, your insurer will reward you with a no claim bonus. Under this, they will either reduce your premium for the new year or increase your sum insured.

Q. What is no claim bonus with an example?

Consider that you have purchased a health insurance policy with Rs. 5,00,000 as the base sum insured for Rs. 5,000. If you do not raise a claim during the policy period, your insurer will offer a 15% discount on your premium. With this, you get to pay only Rs. 4,250 as a premium for the same sum insured. 

The insurer can also boost your sum insured by 15% in case of a cumulative bonus. This will increase your coverage amount to Rs. 5,75,000 for the policy term. 

Q. What happens to no claims bonus after a claim?

If you file a claim for a health insurance policy, your no claim bonus will get cancelled. 

Q. How many times can we claim health insurance?

You can raise several claims for health insurance policy during your policy period depending on your sum insured limit. 

Q. Is a cumulative bonus for health insurance better than a discount on premium?

Cumulative bonus helps to increase your medical insurance coverage without paying a higher premium. Discounts on premiums reduce your costs of availing the same insurance plan. For the longer run, a cumulative bonus is a better option as it boosts your health insurance coverage. However, if you are facing a financial crunch, a discount on the premium can be more helpful.

Q. Is there a way I can increase my no claim bonus?

You will receive your first no claim bonus at the time of policy renewal for one claim-free year. The longer you go without filing a health insurance claim, the higher will be the no-claim bonus for the subsequent year. 

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