No Claim Bonus Health Insurance: How it Works, Types & Benefits

What is No Claim Bonus in Health Insurance

No Claim Bonus (NCB) is a benefit offered by Niva Bupa health insurance company to policyholders who do not make any claims during the policy period. The NCB is usually expressed as a percentage of the sum insured, and it can be used to increase the sum insured, reduce the premium, or both.

 

The reason why health insurance is an essential purchase is that it is prudent to be financially prepared for any medical emergency that may arise unexpectedly. In case a serious medical event does take place, having a reliable, affordable health insurance plan is the best way to stay financially protected. Having said that, there might also be times when you, fortunately, will not need to avail the benefits of your health insurance policy.

 

Be it due to a change in circumstances or lifestyle, you and your loved ones might go an entire year or multiple years without experiencing a severe medical event. For years like this when no claim on your health insurance is filed from your end, your insurer might offer you lucrative benefits. These no claim benefits of health insurance are an important way in which having claim-free years can help you and your family in the long term.

 

So whether you are looking to buy an individual health insurance plan or a plan for your entire family, here are the benefits of claim-free years on your medical policy.

 

What Type of No Claim Bonuses Can I Receive?

Simply put, a no claim bonus is a benefit offered by your health insurance provider when you spend an entire year without any claims processing on your health insurance policy. It can best be understood as a form of reward offered by the insurer for staying healthy and safe during your policy period. 

 

Different insurers tend to have different regulations in terms of what they offer when you have a claim free year during your health insurance policy. However, there are certain no claim bonuses that are commonly found across most insurance providers in the market. These are cumulative bonuses and discounts on premium and can be availed by the policyholder from the second year of the mediclaim policy.

 

Here is a Deeper Look at Both of these Types of No Claim Bonuses:

1. Cumulative Bonus on Sum Assured

The first important benefit that you can receive from claim free years in your health insurance policy is that of a cumulative bonus. As per the cumulative bonus benefit, for every year in your medical insurance policy that you do not file a claim, the sum assured for your policy will be raised by a specific amount. This additional amount in your sum assured is typically calculated as a percentage of our original sum assured and is cumulatively raised for every claim free year.

 

Let us understand this benefit better with the help of an example. Suppose you have a health insurance policy with a sum assured of Rs 5 lakhs and the cumulative bonus for claim free years being offered by your insurer is 10%. During the first year of your health insurance policy, you file zero claims with your insurer and are thereby eligible for the no claim bonus. As a result, your sum assured will be raised by 10%, resulting in a coverage amount of (Rs 5 lakhs + 10% of Rs 5 lakhs=) Rs. 5.50 lakhs.

 

If there are no claims filed by you in the second year of your health insurance policy, you will again be able to receive the benefit of the cumulative bonus. Your sum assured will be raised by a further 10%, thereby being 20% of your original sum assured. As a result, your sum assured will end up being (Rs 5 lakhs + 20% of Rs 5 lakhs=) Rs. 6 lakhs in the third year of your mediclaim policy. This increment in your coverage amount comes at no extra cost to your premium payments. Keep in mind that it will keep increasing to up to 100% of the sum insured and not beyond that.

 

2. Discount on Premium

Another way in which insurers can offer a no claim bonus in medical policy is by offering a discount on the health insurance premium. With this benefit, your premium amounts will be lowered by a certain percentage by the insurer, but there will be no changes made to the amount of your original sum assured.

 

Let us also understand this no claim benefit with the help of an example. Suppose that you have a health insurance policy with a sum assured of Rs 5 lakhs and a premium payment of Rs. 10,000 per year. The insurer offers a no claim benefit of a 5% discount on premiums. Therefore, if you file no claims during the first year of your health insurance policy, your premium amount for the second year will be reduced to (Rs 10,000 - 5% of Rs 10,000=) Rs 9,500. Keep in mind that although the premium is lowered by the insurer by Rs 500, the sum assured still remains the same ie. Rs 5 lakhs.

 

How Do No Claim Bonuses Help?

For the occasions when an unexpected medical emergency leads to hospitalization expenses and other heavy expenses, your health insurance policy can step in to lighten the load. However, for the long durations during which you or your family members do not require medical or financial intervention, your health insurance policy can still offer you benefits in the form of no claim bonus.

 

Essentially, simply by not filing any claims in your mediclaim policy for a year or more, you can be eligible to receive benefits such as higher sum assured or lower premium amounts. At a time when inflation is driving the prices of healthcare higher than ever before, this proves to be an important advantage. No claim benefits are typically provided on both individual as well as family health insurance plans, so no matter how many people are insured under the policy, the benefit of claim free years can be availed by all.

 

Conclusion

The importance of health insurance is such that even on years when there are no claims filed under the policy, there are still benefits to be availed. However, it is important to note that no claim benefits are not provided by all health insurance providers. That is why it is crucial to consider this factor when you choose the right health insurance ,travel insurance or corporate health insurance from the many options available in the market. Make sure to do your fair share of research and zero in on the best health insurance plan for your specific needs.