As a health insurance policyholder, you are familiar with the protection and peace of mind that comes with healthcare coverage. However, policyholders who maintain good health and avoid filing claims can earn an additional benefit — the No Claim Bonus. This incentive serves as a means to motivate policyholders to prioritise their health and take preventive measures to avoid illness or injury. While the No Claim Bonus is another technical term in the context of health insurance, comprehending its workings can bring significant advantages. Let’s talk about how does no-claim bonus works in health insurance and how, as a policyholder, you can avail yourself of its advantages.
What is a no claim bonus in health insurance?
A No Claim Bonus (NCB) in a health insurance policy is a reward given by insurance companies to policyholders who do not file a claim during the policy term. This reward can be an increased sum insured without any additional premium or a discount on renewal premium, depending on the policy. It acts as a motivation for individuals to maintain good health and avoid unnecessary claims. NCB applies to both individual and health insurance policy for family plans.
Different types of no claim bonus
To understand how NCB in health insurance works, comprehending its type is crucial.
Insurers provide an additional percentage of the sum insured for every claim-free policy year. For each year you do not claim on your health insurance policy, your sum insured grows by a certain percentage up to a pre-specified limit.
For instance, let’s say your health insurance policy has a sum insured of Rs 3,00,000 and a cumulative bonus of 10%. You refrain from filing any claims on your health insurance policy during the initial year. As a result, your sum insured will increase by 10% to Rs 3,30,000 in the second year. If you still don’t make any claims in the second year, your sum insured will increase by another 10% to Rs 3,60,000 in the third year, and so on. This can be a substantial advantage, raising your coverage without any additional premium payments.
The discount on premium NCB works as follows. Let's say your health insurance policy includes this benefit, and you don't make any claims in a policy year. In that case, the insurer will offer you a discount on the premium for the following year. This discount can progressively increase with each subsequent claim-free year, reducing the cost of your health insurance policy’s premium while incentivising you to maintain a healthy lifestyle.
Features of no-claim bonus in health insurance
The main components of a no-claim bonus in health insurance policy are:
- Reward for staying claim-free: This encourages policyholders to avoid small or unnecessary claims.
- Applicable on renewals: NCB is added only at the time of renewal of the policy after a claim-free year.
- Varies by insurer: The percentage increase or discount and the maximum limit differ from one insurer to another.
- Carried forward: The bonus continues to accumulate for every claim-free year, up to a certain cap.
- Available on family policies: Even a health insurance policy for family can avail of NCB benefits.
Benefits of no claim bonus (NCB) in health insurance
Here are some of the advantages of NCB in health insurance:
One of the primary benefits of NCB is that you may receive a discount on the premium for the following policy year. This discount can increase with every consecutive claim-free year.
NCB may also increase your sum insured without incurring extra premiums. This increase in the sum insured can be helpful in the event of a medical crisis that necessitates a higher level of coverage.
A no-claim bonus also ensures that your policy remains valid and renewable as long as you continue making timely premium payments.
How does no claim bonus work in health insurance?
Let us understand NCB through this example:
Suppose you purchase a health insurance policy with a sum insured of ₹5 lakhs, and your insurer offers a 10% cumulative NCB. If you do not raise any claim during the first year, your insured sum at renewal will increase to ₹5.5 lakhs at no extra cost. If you continue to remain claim-free, the sum insured can go up to ₹6 lakhs, ₹6.5 lakhs, and so on (depending on the cap set by the insurer).
However, if you make a claim during any year, your accumulated bonus may either be reduced or lapse entirely, depending on the terms of your policy.
Conclusion
No Claim Bonus is a useful feature in any health insurance policy, rewarding you for staying healthy and not making any claims. Whether you are considering individual coverage or a health insurance policy for family, understanding and using NCB smartly can offer enhanced benefits at a lower cost. Always read the policy documents carefully to know how NCB applies to your plan, and use it as a tool to maximise your coverage and savings.
Disclaimer: The information provided in this blog is for educational and informational purposes only. It is not intended as a substitute for professional advice, diagnosis or treatment. Please consult a certified medical and/or nutrition professional for any questions. Relying on any information provided in this blog is solely at your own risk, and ICICI Lombard is not responsible for any effects or consequences resulting from the use of the information shared.