No Claim Bonus in Health Insurance
No Claim Bonus or NCB is one of the greatest features of a health insurance policy that functions as a reward to the insured person and it is also known as a cumulative bonus. It is a type of bonus amount that is added to the sum insured of the policyholder for every claim-free year. It is needless to say that the higher your No Claim Bonus is, the higher your sum insured will be. It is estimated that due to inflation, every year the medical expenses are rising at the rate of 15% to 20%. If you can maintain a claim-free year, then the No Claim Bonus helps to combat the inflation rate and additional medical costs. So, in that respect, the No Claim Bonus plays a pivotal role for the insured person in the health insurance policies.
What Are The Features Of No Claim Bonus?
No Claim Bonus has come up with a sack full of benefits for you and your family members to safeguard you from different types of life risks. To know more about its benefits and features, have a look at the below mentions.
- No Claim Bonus acts as a cushion to your financial securities in the face of medical emergencies.
- Most health insurance companies offer 5% to 10% NCB for each claim-free year.
- One can avail of the facility of NCB for both individual and family floater type of health policies. Under the individual health insurance policy this benefit can only be availed of by the insured person, whereas, under the family floater policy, each member who is insured under that policy can enjoy NCB. But it has to be remembered that the terms and conditions may vary from one insurer to another insurer, in this case.
- It automatically decreases the cost of renewing a health policy. So, under the same plan, you can avail of more coverage at a low premium cost.
- One can also transfer the accrued NCB benefit while she/he transfers the policy to another insurance company.
- In case, if you file multiple claims made within the same policy period, the available sum insured including the cumulative NCB benefit is taken into consideration.
- Moreover, the benefit of NCB always inspires the insured person to maintain a healthy life and a good portfolio of medical records and he/she only files the claim when it is much needed.
- If you are not able to pay the premiums timely, even within the grace period, the policy lapses, and along with that the NCB benefit also expires.
- As per the new regulations of the Insurance Regulatory and Development Authority of India (IRDAI), the total accrued NCB will not be lost after filing a low-value claim.
Different Types of No Claim Bonus
Usually, the health insurance companies offer two different types of No Claim Bonus and they are Discount on the premium amount charged for a policy, and Cumulative benefits offered in the form of higher sum insured amount. To know in detail about these two types, have a look at the below mentions.
1. Discount on the premium amount charged for a policy
Under this type of no claim bonus, the premium rate that you need to pay for your existing policy decreases by a certain percentage as determined by the insurer for every claim-free year. But in this case, no changes are made to the sum insured.
For your better understanding, here is an example. Suppose, Mr. Das has bought a health insurance plan of Rs. 10 lakhs in India, and he has to pay Rs. 20000 as the premium annually for it. His insurance company offers a discount of 5% as the no-claim bonus on the renewal premium amount for every claim-free year. So, at the time of renewal of the policy, he has to pay Rs. 19000as policy premium if he qualifies for the NCB benefit. In that case, the sum insured will remain the same, Rs. 10 lakhs.
2. Cumulative Benefits offered in the form of higher sum insured amount
Under this type of no claim bonus, the coverage amount or the sum insured of the policy increases by a certain percentage as per the terms and conditions of the policy, for each claim-free year. But, in this case, the premium amount that the insured has to pay at the time of renewal, remains the same.
With this example, the concept will be clearer. Suppose, Mr. Bose has purchased a health insurance plan under any health insurance provider in India of Rs. 10 lakhs. The insurer offers a 5% increase on the sum insured, for every claim-free year. If Mr. Bose has not made any claim in the first policy year, his sum insured will increase by 5% and will be Rs. 10.5 lakhs. If he does not file any claim for two consecutive years, the sum insured will be Rs. 11 lakhs, whereas the premium rate will be the same. This means that at the end of 3rd policy year if he faces any medical emergencies, he can file a claim up to Rs. 11 lakhs.
Available Add-on Cover for No Claim Bonus in Health Insurance
Whereas the majority of the health insurance companies offer a fixed percentage for the no-claim bonus, however, a handful of the insurers offers an add-on cover to boost the percentage that is offered as A Claim Bonus. Some add-on covers can help boost NCB up to 50% in a single year. There is typically a certain limit on the maximum amount that can be obtained as NCB, as per the terms and conditions of the company. For example, the No Claim Bonus Super add-on cover offered by Care Insurance provides a 50% boost of the sum insured in a single year. The maximum limit here is capped at 100% of the sum insured.
How Does No Claim Bonus Work in Health Insurance?
It is unlikely that the policyholders file claims every year or in the very first and second years of the policy period. Usually, if it is minor medical issues and the expense is bearable, the insured people tend not to make any claim for avail of the benefit of No Claim Bonus. Follow the below example to understand, how the NCB functions for the health insurance policies.
For example, suppose, Mr. Sharma has a no claim health insurance with a sum insured Rs. 20 lakhs. His insurer offers 5% of cumulative NCB in health insurance for every claim-free year with a maximum of 50%. Thus, the total sum insured available for him after every claim-free year would be as followings,
- After a 1st claim-free year the sum insured= Rs. 21 lakhs
- After a 2nd claim-free year the sum insured= Rs. 22 lakhs
- After a 3rd claim-free year the sum insured= Rs. 23 lakhs
As the limit for NCB in health insurance provided by his insurer is 50%, the total sum insured available for Mr. Sharma becomes Rs. 30 lakhs. No-claim bonus enables him for maximum coverage with an increased sum insured amount every year.
Do All Health Insurance Policies Offer No Claim Bonus?
No, it cannot be said that all the health insurance companies that are available in India, offer the benefit of no claim bonus. It has to be remembered, the insurers that provide this benefit come with the terms and conditions as per the company guidelines. Hence, it is very important to read the policy documents and policy wordings before purchasing a health plan so that you do not have to face any trouble in the future and you do not regret your decision of choosing that insurer.
Alongside this, make sure that you understand all terms and conditions of the company obtaining the NCB facility and the policy should be transparent to you, such as how much the policy coverage can be increased and what is the percentage of NCB, etc. For better understanding, you can also compare the health insurance providers online, on the basis of the NBC benefit and then go for the one that suits your requirements the most.
Frequently Asked Questions
There are 13 critical illnesses covered in the SBI Critical illness policy. This includes:
- End-Stage Kidney Failure
- Primary Pulmonary Arterial Hypertension
- Multiple Sclerosis
- Major Organ Transplant
- Coronary artery bypass grafts (with surgery to divide the breastbone)
- Aorta Graft Surgery
- Heart Valve Surgery
- Myocardial Infarction (First Heart Attack)
- Total Blindness
- Obesity / Weight Control treatments
- Change of Gender Treatments
- Cosmetic or Plastic Surgery
- Participation in hazardous or adventure sports
- Breach of Law
SBI Insurance company provides its customers with a free look period of 15 days. During this time period the customers can return their policy back to the company if he/she does not feel satisfied with the terms or conditions of the plan.
- Visit the website and select the menu tab located at the top right corner.
- Click on ‘quick assist’ option.
- Select the ‘claim status’ option and fill in the required details.
- The next page will show the status of your claim request.