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What Are No-claim Benefits in a Health Insurance Plan?

by Byrne Anderson
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The no claim bonus or cumulative bonus in health insurance rewards the policyholder for not making any claims in the policy year. The health insurance no-claim bonus or cumulative bonus is awarded as an increase in the total sum insured.

Features of the cumulative bonus in health insurance

The insurance company grants a cumulative bonus as a reward for the policyholders for keeping healthy and not making a claim against hospital expenditures. This can be applicable for the family floater plans as well, where all the members of the family would be entitled to the cumulative bonus.

Some essential facts about cumulative bonus are as follows:

  • The bonus would be credited as an increase in the sum assured. The rate of increase can be about 5% to 50%, depending on the policy terms.
  • If the insured makes a claim, the cumulative bonus might be lowered by a set percentage, and no bonus would be provided during the claim year.
  • Above all, the cumulative bonus would be transferable and can be moved when the individual transfers from an existing health insurance plan to a new plan, either within the existing provider’s network or to a new insurance provider.

* Standard T&C Apply

How does it work?

Suppose, Mr. Sharma bought a health insurance plan with a sum insured of Rs. 4 lacs and did not file any claim in the first year. He shall get a cumulative bonus of 5% when it’s time to renew, bringing the total sum insured for the next year to Rs. 4,20,000. Instead of Rs. 4 lakhs, he can now claim up to this new sum insured amount.

Also, if he doesn’t file a claim in the second year, he gets a cumulative bonus of 5%. This means that his sum insured goes up again, and with the cumulative bonus, it will be Rs. 4,40,000. This bonus can reach 100% of the amount insured. However, it is subject to the policy terms. *

Benefits of health insurance cumulative bonus

While there are several benefits of health insurance, the cumulative characteristic of health insurance offers several distinct benefits to the policyholders, such as:

  1. Increase in the base sum assured: As the bonus is accumulated in the total sum insured, it could be utilised to pay a big medical bill in the future. As healthcare expenses seem to increase steadily, the accrued bonus can cover hefty medical bills.
  2. The cumulative bonus is transferable: The cumulative bonus can be simply transferred during policy portability, and thus, the bonus accumulated are available with the new policy.
  3. Financial cushion: It provides a financial cushion for the entire family to pay for medical crises. Also, the sum insured does not decline below the original value, even after several claims.

* Standard T&C Apply

Loss of cumulative bonus: The cumulative bonus earned under a health insurance plan would lapse if the policy is not renewed within the grace period. All health insurance policies in India do not offer the facility of cumulative bonus, and thus, it becomes vital to study the terms and conditions of the policy carefully while getting insurance and opt for the plan that offers this facility.

Policyholders should also learn the percentage of the cumulative bonus and the rate at which the sum insured would increase every year before making a choice. * Standard T&C Apply

To conclude

The cumulative bonus is a key characteristic to be evaluated in health insurance policies before buying one. One of the main health insurance benefits is that it helps families to stay covered even at times of growing healthcare expenditures.

‘Insurance is the subject matter of solicitation. For more details on benefits, exclusions, limitations, terms, and conditions, please read the sales brochure/policy wording carefully before concluding a sale.’

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