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 work in health insurance and how as a policyholder, you can avail of its advantages.
How Does NCB in Health Insurance Work?
To understand how NCB in health insurance works, comprehending its type is crucial.
• Cumulative bonus:
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.
• Discount on premium:
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.
Benefits of No Claim Bonus in Health Insurance
Here are some of the advantages of NCB in health insurance:
• Premium discount:
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.
• Increased coverage:
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.
• Guaranteed renewal:
A no-claim bonus also ensures that your policy remains valid and renewable as long as you continue making timely premium payments.