July 22, 2021

Accumulate your No Claim Bonus

We all like attaining some extra benefits in the form of a Bonus. The health insurance policy also felicitates you with a bonus known as “ NO CLAIM BONUS (NCB)” or Cumulative Bonus. I am sure most of you must have heard this term about your car/two wheeler insurance. Let me articulate the No claim bonus under “Health Insurance Policy”.

No claim bonus is a value adding benefit or advantage under your health insurance plan. In the event of no claims filed under your health insurance plan during the policy term, your insurance company will offer you a “No Claim Bonus” as an accolade for keeping yourself fit and healthy.

Accumulated No Claim Bonus helps you to enhance your sum insured under the health insurance policy without paying any extra money as premium. It is a reward by the insurer to acknowledge you to maintain a good health which is evident by no claims under the policy.

No claim bonus is a win-win situation for both the insured and the insurer in monetary terms.

  • For an insurer, there are no payouts or claim disbursements under the policy.
  • For an insured, with no claim bonus he/she is getting an enhanced coverage over and above the base sum insured opted under the health insurance policy with the same base premium amount.

No Claim Bonus is usually expressed as a percentage enhancement of the Sum Insured which ranges from 5% of Sum Insured to 30% per annum up to a maximum of 50 %– 100%of the Sum Insured. The No Claim Bonus varies from plan to plan and from insurer to insurer.

No Claim Bonus Percentage Enahncement
It is prudent to preserve  and accumulate your No Claim Bonus; now it does not mean that you should not file a claim under your health insurance policy to save your money on Health insurance premium. After all, health insurance policy is taken so that in the event of a claim, all your financial worries are taken care by your Health Policy. However, it is important that you don’t file a claim which is petty and affordable at your end or can be accommodated in your budget. Claim filed for the small amount waive off or nullify your accumulated No Claim Bonus. The bottom line is that – It is important to assess what you will get (as a claim amount) over what you will lose (in the form of a no claim bonus).

Let Us Understand it with an Example:

Mr.Narang purchased a Health insurance policy of Rs 5 lakh as the sum insured. The plan offers a 10% increment in sum insured yearly as a no claim bonus subject to a maximum of 50% of the sum insured.

In the first year, Mr. Narang did not file a claim under his health policy resulted in Rs 50,000 increase in the sum insured elevating the total sum insured to Rs 5,50,000.

In the second policy year, Mr. Narang suffered from a severe viral fever which resulted in hospitalization for 2 days with a total bill amount of Rs 10,000.

Now, if Mr. Narang claims the hospital bill of Rs 10,000 under his health policy, he would lose out a No Claim Bonus of Rs 50,000.

In the event of Mr. Narang paying the hospital bill of Rs 10,000 out of his own pocket,the sum insured under his Health Insurance policy will elevate to Rs 6,00,000 (Rs 5,50,000 – for 1st year and another addition of Rs 50,000 as NCB (10% of the base sum insured) in the 2nd policy year)

This, way ideally Mr. Narang is paying a premium for Rs 5,00,000 sum insured, but by preserving his cumulative bonus/no claim bonus, he is getting a sum insured of Rs 6,00,000 within a span of 2 no claim policy years.

It is important to do a cost- benefit analysis with respect to your No Claim Bonus and the actual admissible claim, amount to attain maximum gains.

Lets have a look at No Claim Bonus offered by various Heath Insurance Plans:

No Claim Bonus Offered by Various Heath Insurance Plans

It is imperative to understand your cumulative bonus clause under your health insurance policy and avoid unnecessary, small amount claims which you can bear out of your pockets without any financial strain. This way you will build upon your base sum insured to a maximum of 50% or 100% (as offered under your health plan) of the sum insured with the same base premium making your Health Insurance plan more affordable by paying lesser premium and getting enhanced coverage.

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