No Claim Bonus In Health Insurance

No Claim Bonus in health insurance is a type of monetary benefit given to the policyholders for each claim-free year. There are two ways in which NCB in health insurance works. In the first instance, the sum insured under a health insurance plan will increase for the policyholder for each claim-free year. Alternatively, if the policyholder does not make any claims during a policy year, the insurance provider might reduce their insurance premium cost at the time of renewal.

Important Update (Dated May 30, 2024) – Good news for Health Insurance policyholders! According to the Master Circular on Health Insurance Business 29052024 rolled out on May 29, 2024 by IRDAI, insurers are to decide on the request for cashless claims within 1 hour of receiving the request. Also, the final claim is to be granted within 3 hours after the policyholder’s discharge from the hospital. Insurers have been directed by IRDAI to establish necessary systems and procedures for this process by July 31, 2024.

The Master Circular on Health Insurance Business 29052024 circular is available here - https://irdai.gov.in/document-detail?documentId=4942918

Primarily, there are two types of NCB in health insurance that you should know about. Here are all the details about them.

1. Cumulative Bonus

In this type of No Claim Bonus, you get the benefit of a progressive increase in the sum insured. So, if you make no claims throughout the policy tenure, your sum assured increases year after year progressively, for every claim-free year. This is known as a cumulative bonus.

2. Discount on Renewal Premium

Another kind of NCB is a discount on your health insurance renewal premium. In this case, if you have a claim-free year, the insurance provider will give you a discount on the health insurance premium when you renew your policy next year. The sum assured in this case will not be affected by the reduced premium.

Following are the various features you get to enjoy with a no-claim bonus in health insurance:

• No claim bonus or NCB in health insurance can be availed by any insured member in case of a family floater plan

• When you shift to new health insurance, the accumulated no claim bonus from existing health plan can still be used

• A discount of up to 20% can be availed during policy renewal, if you have NCB

• A no claim bonus   is terminated once you raise a claim

• Purchasing a no claim bonus add-on can give you free claims up to 3 times without losing your NCB

Not making a claim during your policy tenure can be helpful in more than one way. You earn a no-claim bonus, which is quite beneficial and cuts the burden of health plan costs on an individual. It is applicable for both individual and family floater plans. Check out the benefits of a no claim bonus:

• No claim bonus cuts on the policy renewal cost at the time of renewal

• Since no claim bonus is accumulated by making zero claims in a policy year, it restricts the policyholders from making unnecessary claims and motivates them to stay healthy

• Almost all the health insurance plans, be it individual or family floater, offer NCB features. So, people have all the liberty to choose their ideal plan.

To understand how the No Claim Bonus in health insurance works, you need to look at an example for each kind of NCB as explained above. Let us look into a couple of instances that can offer more clarity on how NCB in health insurance works.

Say you have a health insurance plan that offers no claim bonus in the form of a 10% increase in insurance coverage. And let us assume that the initial coverage offered at the time of purchase is ₹ 2,00,000.

Now, if you do not raise any claim on the policy during the policy term, your insurance coverage will increase by 10%, to ₹ 2,20,000 upon renewal, all thanks to your no claim bonus.

Now, let’s say you have a health insurance plan that offers no claim bonus as a discount on your renewal premium. And say you initially have to pay ₹ 10,000 as premium annually when you purchase the plan.

After a claim-free year, when you have to renew the policy, your renewal premium will be less than ₹ 10,000, thanks to the discount offered. The exact amount of discount depends on the terms and conditions of the policy.

In the case of a health insurance plan that offers NCB, no claim bonus, in the form of increased coverage, there is no set percentage by which the sum insured will increase. The percentage of increase will depend on the insurance provider and on the policy you choose.

This is why it is essential to read your policy document carefully and check the terms and conditions thoroughly before you make your purchase.

Let us take the case of two different policyholders to understand no claim bonus better. We have two policyholders - each of whom is about to purchase a health insurance plan.

The first policyholder wants his insurance coverage to increase in the future, so he opts for a policy with a no claim bonus in the form of an increased sum assured for every policy-free year, by 10%. Initially, the sum assured is ₹ 10 Lakhs. But after one claim-free year, his coverage increases to ₹ 11 lakh. This continues until the sum assured reaches the limit set by the insurer.

The second policyholder, on the other hand, wants to reduce his future insurance costs. So, he opts for a policy that gives discounts on the renewal premium instead. Each claim-free year brings down his insurance premium by 5%. So, in the first year, he paid an annual premium of ₹ 10,000. In the second year, this became ₹ 9,500. In this manner, the discounts continued till the limit mentioned in the plan’s terms and conditions.

Before you go ahead and buy a health insurance plan that offers a no claim bonus benefit, you need to know some important things about this feature. Some of these essentials are explained below.

1. There is a limit on the benefits

As you have seen above, no claim bonus can either give you increased coverage or a reduced premium. However, neither the increase nor the discount is indefinite. There is a cap on the amount up to which your coverage can increase, or below which your premium cannot reduce.

2. NCB is applicable to individual and family plans

No claim bonus benefits can be available on both individual as well as family floater health insurance plans. So, in case of a family cover, if any member raises a claim, the NCB will not be applicable for that year.

3. The terms and conditions of the NCB are important

The terms and conditions of the NCB in health insurance on each policy will be different. So, make sure that you read the details thoroughly before making your purchase. This way, you will be aware of the benefits as well as the limits on your plan’s NCB.

No. Not all health insurance policies in India offer a no claim bonus. While most plans do, there are some policies that do not offer this feature. This is why it is important to do your due diligence before you purchase your policy

If you are unsure about whether or not your policy offers NCB, no claim bonus, you can always check with your insurance provider if this feature is available. 

Health Insurance Plans Available at Bajaj Markets