To avail of health insurance coverage benefits, the policyholder typically pays a premium to the insurer. To get the best out of this contract, it is necessary to know the various features of a health insurance plan. One important feature of health insurance policies is the cumulative bonus. A cumulative bonus in health insurance incentivises policyholders to maintain a healthy lifestyle and avoid making claims during the policy term. By doing so, the policyholders reduce the risk of illnesses and help the insurance company to manage their costs effectively. It builds loyalty among policyholders and encourages them to renew their medical insurance plans with the same insurance company.
What is a Cumulative Bonus in Health Insurance?
Let us start with understanding the cumulative bonus health insurance meaning. A cumulative bonus is a reward that health insurance companies offer to their policyholders for not making any claims during the tenure of the policy. It is an additional benefit that accumulates over the years, and the policyholder can avail of it at the time of renewal. The cumulative bonus is a percentage of the sum insured; it gets added to the policyholder’s sum insured without any additional cost.
Benefits of Cumulative Bonus in Health Insurance
One of the primary benefits of the cumulative bonus in health insurance is that it increases the sum insured without any extra cost. The cumulative bonus health insurance provides an incentive for the policyholder to develop habits that promote a healthy lifestyle and avoid raising claims. By not making any claims, the policyholder can accumulate the bonus and use it to increase his/her coverage. This encourages the policyholder to take preventive measures and reduce the risk of illnesses. The cumulative bonus provides additional coverage to the policyholder, which is useful in case of medical emergencies and unexpected illnesses.
The cumulative bonus in health insurance is a cost-saving tool as well. This is because, with a cumulative bonus, policyholders can increase their sum insured without paying an additional premium. This helps reduce the financial burden of healthcare expenses and provides peace of mind to the policyholder. In addition to the cost-benefit, the cumulative bonus helps build loyalty and encourages policyholders to renew their policies with the same insurer. Renewing the healthcare plan with the same insurance provider becomes way more beneficial because of the cumulative bonus in health insurance.
Difference Between Cumulative Bonus and No Claim Bonus in Health Insurance
The terms cumulative bonus in health insurance and no-claim bonus are often used interchangeably in medical insurance. While the concept and broad idea of both terms are the same and somewhat overlapping too, there are not exactly the same.
The cumulative bonus is a benefit that accumulates over the years and increases the sum insured without the need to pay an additional premium. On the other hand, insurers offer a no-claim bonus as a discount on the premium if a policyholder does not make any claims during the policy tenure. The no-claim bonus reduces the premium payable by the policyholder at the time of renewal. In essence, the cumulative bonus health insurance provides additional coverage to the policyholder, while the no-claim bonus provides a discount on the premium.
A cumulative bonus is an important feature of health insurance policies providing additional coverage to the policyholder by offering an increased sum insured at the same premium rate. Although the terms no-claim bonus and cumulative bonus in mediclaim policy get used interchangeably, they are not the same. And understanding the distinction can help policyholders make informed decisions about their medical insurance policies.