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Cumulative Bonus in Health Insurance

Cumulative bonus or No Claim Bonus (NCB) in health insurance refers to the monetary advantage the insured gains as a reward for not making any claim during the policy term. However, the reward may vary with different health insurance companies.

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Some may reward the insured with a discount in the premium for the consequent policy year, while some may offer an additional sum insured to the health insurance policy, without charging an extra premium. Generally, the health insurance companies offer a 5%-50% increase in sum insured for every year a claim is not made.

Also Read: The Role of Cumulative Bonus in Health Insurance

How Does Cumulative Bonus in Health Insurance Work?

To simplify how cumulative bonus in health insurance works, let us take the example of Mr. Ram. Mr. Ram has opted for a health insurance policy with a sum insured of Rs. 5 lakh and a cumulative bonus of 50% at the time of renewal, up to 100% of the total sum insured. As Mr. Ram did not make any claim during the policy year, he was rewarded with additional Rs. 2.5 lakh to the sum insured at the time of renewal. This takes the sum insured to Rs. 7.5 lakh. If Mr. Ram does not file a claim in the following policy year, his total covered will be enhanced by Rs. 2.5 lakh, bringing it to Rs. 10 lakh. As a % benefit on the sum insured is the highest limit, this is when the benefit will end. This is only an example; each insurance company has its own rates for increasing the total insured or receiving a discounted health insurance premium.

Effect on Cumulative Bonus When a Claim is Made

It is determined by the insured's choice of insurance carrier. However, if the amount of the claim made during the policy year was relatively little, some insurance companies still offer a cumulative bonus. If the insured makes a claim within a year, the original sum insured is usually restored. However, the policy rules are now more flexible, since if the insured makes a claim, their benefit is simply reduced.For example, if a person is insured for Rs. 10 lakh and he/she makes a claim of Rs. 10,000, then it goes to the same percentage of the cumulative bonus as Rs. 10,000 is a small amount as compared to the sum insured.

Effect on Cumulative Bonus When the Insurance Company is Changed

When an insured moves from one insurance provider to another, the cumulative bonus can be transferred as well. However, the type of benefit that the new insurance company provides is determined by the type of bonus—whether it is a premium-based or a sum-based bonus—as each has its own set of terms and conditions.For instance, if the insured is aged below 45 years, then he/she can transfer the entire bonus to the new insurer. Whereas if he/she is aged more than 45 years, then only 50% of the bonus can be transferred. While porting the sum insured, the cumulative bonus is considered for choosing the sum insured in the new insurance company.

All the insurance companies have a specific limit under the cumulative bonus or No Claim Bonus clause. The maximum increase in the sum insured or discount on health insurance premium depends on this fixed percentage.

Is There an Option to Avail 100% Premium Discount as Cumulative Bonus in Health Insurance?

Most insurance companies offering health insurance plans come with a specific limit under their No Claim Bonus clause. The maximum discount on the premium offered or increase in sum insured, whatever the insurance company offers, depends on this fixed percentage. Some insurance providers, such as Digit General Insurance, give a 100% increase in the sum insured after two years of no claims and a 50% increase after the first year of no claims. You must renew your health insurance coverage on time to receive the No Claim Bonus; else, the cumulative bonus will expire.

Is There any Add-On Cover For Cumulative Bonus?

A few insurance companies offer no-claim bonus add-on covers, which guarantee an enhanced proportion of the sum covered or a premium discount to the insured. It is not required to obtain this add-on coverage, but you can do so by paying an additional premium at the time of insurance acquisition.Added coverage is the reason why many people prefer buying this add-on cover.

What Happens if Two Health Insurance Plans Get Overlapped?

If two health insurance plans overlap, you can take advantage of a cumulative bonus in both without difficulty. However, you should keep in mind the significance of renewing your health insurance policy.You must renew your health insurance plans on time to avoid any hassle. If a health insurance policy is not renewed on time and it lapses, then you will not receive any No Claim Bonus or cumulative bonus.

Things to Know About Cumulative Bonus In Health Insurance

A cumulative bonus or No Claim Bonus is an additional benefit that many health insurance plans come with. In order to make the most of your health insurance policy, you must understand the term better, especially if you are a first-time health insurance policy buyer.

  • There are two types of No Claim Bonus or cumulative bonus offered by insurance providers. In the first situation, the amount of coverage grows for each year that the insurer goes without making a claim. In the second situation, a premium discount is offered, which reduces the premium price each year that no claim is filed.
  • No Claim Bonus benefit comes with a limit. Generally, the limit is set between 50%-100%. This means that the insured can enjoy an increase in the sum insured for this set limit only. Kindly note that the policy terms and conditions may vary with different health insurance plans and you must go through the brochure to make an informed buying decision.
  • Cumulative or No Claim Bonus benefit can be availed under both individual health insurance plans as well as family floater health insurance plans. So, there is no need to consider which health insurance policy to buy in order to avail No Claim Bonus benefit.
  • The insured No Claim Bonus benefit is not available from every insurance company. However, if an insurance provider offers the same, it is essential that you read the policy terms and conditions before making a decision to avoid any problems during claim settlement.You can also talk to the customer care executives of the insurance company in case of further doubt.
  • Generally, the cumulative bonus is accumulated for up to 10 years.
  • It is important to renew your health insurance policy on time, otherwise, you will lose the No Claim Bonus accumulated during the policy term.

The easiest way to notch up a good No Claim Bonus or cumulative bonus in health insurance is to stay fit and healthy. It will not only reduce the chances of falling ill but also reduce the chances of raising a health insurance claim. This, in turn, will ensure that the insured can make the most of the cumulative bonus under their health insurance policy.

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FAQ About Cumulative Bonus in Health Insurance

  • What is the cumulative bonus in health insurance?

    Cumulative bonus in health insurance is a kind of reward or monetary advantage that the policyholder gains for not making any claim during a policy year as they are fit. The benefit of cumulative bonus can be availed at the time of renewal by increasing the sum insured amount, which may differ from insurer to insurer. Note that the cumulative bonus can either be premium based or sum insured based. It can only be up to a certain number of claim-free years.

  • What happens to my cumulative bonus if I switch to a different health insurance company?

    When you switch to a different insurance company, then it is possible to transfer your cumulative bonus, which may be premium based or sum insured based. Different insurance companies may have different sets of terms and conditions when it comes to the transfer of cumulative bonus. For instance, you can transfer the complete bonus if you are aged below 45 years and 50% of the cumulative bonus in case you are aged more than 45 years. When porting the sum insured, the new insurance company will consider your cumulative bonus to choose the new sum insured. 

  • What happens to the cumulative bonus if I make a claim within a policy term?

    This depends on the terms and conditions of your insurance company. But some insurance companies still offer you a cumulative bonus in case the claim made during the policy year was small. But usually, if you make a claim during a policy year, then your original sum insured is reinstated. Current policy rules are flexible, and if you make a low claim, then the rewards will reduce too. For example, if you are insured for Rs. 10 lakh, and make a claim for Rs. 10,000, then it reduces your cumulative bonus also by the same percentage. 

  • What is the maximum amount of cumulative bonus that I can receive?

    Different insurance companies have different limits for the cumulative bonus. Generally, the maximum limit is 50%.

  • Can I get benefited from a cumulative bonus if I complete 10,000 steps daily?

    There are a lot of insurance companies that offer a cumulative bonus as a reward for staying fit. You can avail the cumulative bonus benefit if you are staying healthy and have made no claims in the policy year. Generally, the insurance companies do not even ask for proof of the number of steps completed. 

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