What is No Claim Bonus?
‘No Claim Bonus’(NCB) is a monetary benefit given by the health insurance company for not claiming any amount in a particular year. This benefit is like a recognition, just like a company gives a bonus to their employees once a year for appreciating their contribution. Similarly, even in this case, health insurance companies give a reward to their policyholders in the form of a no-claim bonus.
Want to know more about no claim bonus?, Apart from basic understanding some necessary facts and characteristics shall be highlighted. You will understand the role of no claim bonus in health insurance after referring to this article.
Types of No Claim Bonus:
Cumulative Bonus: No claim in a health insurance plan is the criteria for a bonus in the next year. This means that if you do not claim for that particular tenor, then the monetary reward which you are going to receive is called a cumulative bonus. That particular amount will be added to your sum insured in the next term when you renew the policy. Let us assume that the coverage amount of the policyholder is Rs.4 lakhs and has not made a claim for one year. The insured will receive a bonus of 10% extra cover without any additional premium being charged. This get’s added to the sum insured and will update your coverage amount by Rs. 4.4 lakhs. So Rs, 40,000 has been added to your sum insured. The percentage of no claim bonus depends on the company’s terms and conditions. The bonus amount can increase further for every claim-free year. However, if you make a claim, the cover amount will reset to the initial 4 lakhs at the time of renewal.
Discount on renewal of premium: This is another way, where the insurance provides benefits for not claiming by providing a discount on your premium. The coverage amount will remain the same but you will receive a discount on your premium. For instance, if the premium of the policyholder is Rs. 10,000 for a 4 lakhs cover and a claim has not been made in a year. Then in such a case based on the company’s policy now the revised premium will be Rs. 9,500. This means that now the policyholder will have to pay Rs 9,500 in the next term with the benefit or discount of Rs 500. The discount offered may vary from company to company.
Limitations in No Claim Bonus
Besides these advantages, there is also a limit set by the insurance provider, post which this facility will stop functioning. The max cap up to which this facility can be availed differs from provider to provider. Some may fix the max cap limit of 5 years and others may keep it like 9 years.
Apart from this, the insurer also sets a percentage as a limit of no claim bonus. Generally, this limit falls between 50-100%, which may vary from insurer to insurer. Let’s say the coverage amount of your health insurance plan is Rs 1 lakh with 50% of no claim bonus given by the insurer. This means that your amount will be raised by Rs 50000 and your revised coverage amount will be Rs 1.5 lakhs, not beyond that.
Can you transfer your No Claim Bonus?
It is possible to transfer the no claim bonus which has been availed by the policyholder to a new health policy and from a different provider. This facility can only be availed at the time of renewal of your policy.
Do every health insurance policy provide no claim bonus?
No, Not every health insurance policy provides no claim bonus. Certainly, many of them do provide, you need to read the policy documents carefully to know about the no claim bonus. The percentage of no claim bonus and the amount up to which your sum insured can be increased will be mentioned in the documents.
Boosting your health insurance with no claim bonus will help you face uncertainties like medical emergencies, in case it arises due to medical inflation. This feature can also motivate you to stay fit by following a diet properly and exercising in order to grab the listed advantages.
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