However, as you age and are exposed to various health-related concerns, not only does the need for higher health insurance coverage arise, but also the need to pay more out of your pocket. But what if we tell you that you can increase the policy coverage every year without increasing your budget? Sounds interesting? If yes, you need to understand the concept of a no-claim bonus in health insurance
What is a no-claim bonus?
A no-claim bonus is a continuity benefit you receive from your insurer for spending a claim-free year in your policy period.
1. Cumulative bonus
As the name implies, in this NCB, the sum insured of the base plan is increased by a fixed percentage for every claim-free year. The maximum cumulative bonus you can receive varies with the insurer and can range between 50% and 100% for five consecutive policy years without any claims.
The increased sum insured does not come with an increased premium.Example:
Suppose you have a standard health policy with ₹20 lakh coverage. The insurer states that for every claim-free year, they will increase the sum insured by 10%. You didn’t raise any claim for five years in a row. Here are the details of your bonus.
2. Discount on premium
Under this category, for each claim-free year, the insurer reduces your policy premium at the time of renewal. For example, suppose you currently pay ₹8,000 per month for your ₹20 lakh health coverage. The no-claim bonus (NCB) benefit is 10% for every claim-free year. If you don’t raise any claims in the first year, when you renew your plan with your existing insurer, your premium will be ₹7,200 (₹8,000 – ₹800).
Similarly, if you do not submit a claim for five consecutive years, your premium will be reduced to Rs 4,000 (50% of your initial premium amount).
Benefits of no-claim bonus
Listed below are the advantages of a no-claim bonus.
1. Pocket-friendly premiums
With inflation making everything more expensive, a no-claim bonus allows you to obtain comprehensive medical coverage much lower than what you paid a few years ago. The only condition to access this benefit is to remain healthy and active. Additionally, to benefit from the lower premium, it is recommended to refrain from filing minor claims, usually related to coughs, colds, and other seasonal illnesses.
2. Better Financial Protection
As you age, the chances of contracting age-related illnesses increase. You may find yourself dealing with diabetes or an issue related to blood pressure. In this scenario, the coverage you chose a few years back might not be sufficient today. This is where the cumulative bonus comes to the rescue.
You can get increased coverage without paying an additional premium. The insurer does not require you to undergo a holistic medical screening to increase the coverage.
3. Applicability
The no-claim bonus applies to both family floater plans and individual health insurance It also works in the same way for both types of coverage.
Can I retain a no-claim bonus after filing a claim?
Regardless of how fit and healthy you are, medical emergencies can strike at any time. Recognising this, many insurers offer a no-claim bonus protection rider. Under the NCB protection rider, your cumulative benefits or premium discounts will not be affected, regardless of how many claims you file in a year.
However, since this rider is available for an additional premium if you are young and lead a healthy lifestyle, you may choose not to purchase this coverage. This add-on is more suitable for those with medical conditions requiring frequent hospitalisations, medical screenings, or doctor visits.
Points to remember
As mentioned earlier, the no-claim bonus percentage varies among insurers. When comparing different health insurance products or providers, you should consider many factors, not just the no-claim bonus. Here are the points to evaluate:
- Compare the claim settlement ratio. This metric shows how many claims the insurer settled out of the total received in a financial year. If the ratio is less than 90%, it may indicate issues.
- Another crucial consideration is the list of hospitals empanelled with the insurance provider. Check the network hospital details on the insurer’s website to see the list of empanelled hospitals in your city. If reputable hospitals are not listed, consider skipping that insurer.
- Review the list of diseases covered under different plans. Also, read through the policy wording of your preferred insurer to understand the claim process and the list of exclusions.
No-claim bonus in health insurance offers a dual advantage of increasing policy coverage without raising premiums and reducing costs through premium discounts. This benefit rewards healthy habits by enhancing financial protection against rising medical expenses over time.
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