No Claim Bonus (NCB) in Health Insurance & Types of NCB

The discovery of numerous diseases, high medical inflation of 14%, and unhealthy lifestyles are some of the reasons that make health insurance nothing less than a basic necessity. Beyond providing financial protection in times of illness or accidents, health insurance policies also offer other benefits and rewards as well. One such appealing benefit that you can enjoy with your health plan is the health insurance no claim bonus. While you may already know about no claim or cumulative bonus in health insurance, did you know that there are different types of NCB in health insurance?

Read on as we discuss all about no claim bonus health insurance, its types and how it can help you in cutting back on your health insurance premiums.

Table of Contents

What is no claim bonus in health insurance?
Types of NCB in Health Insurance
1. Cumulative Bonus
2. Premium Discount
Things to know about no claim bonus in health insurance
Conclusion

What is no claim bonus in health insurance?

NCB, or No Claim Bonus, in health insurance, is a feature that benefits policyholders who do not file any claims during a policy year. Simply put, policyholders who maintain a claim-free record during the policy tenure can earn a No Claim Bonus (NCB). This bonus offers them a discount on their upcoming premium, thus resulting in lower premiums upon renewal.

The no claim bonus, thus, helps you make the most of your health insurance plan, even if you do not make a claim. You can not only reduce the burden of health insurance on your pocket but also enjoy higher coverage.

Types of no claim bonus (NCB) in Health Insurance

Broadly, NCB or health insurance no claim bonus can be classified into two categories. Let us understand both:

1. Cumulative Bonus

Let us first understand what is cumulative bonus in health insurance. Some insurance companies make use of cumulative bonus in health insurance in order to reward you for not making a claim during a policy year. They increase the sum insured of your policy by a certain percentage. Depending on the coverage and the bonus limit, you can typically get an increase of 5% to 50% of your base sum insured.

To help understand what is cumulative bonus in health insurance let us take a look at this example. Shilpa Bhatia, a 29-year-old software engineer, has a family floater health insurance plan. The plan with a sum insured of ₹10 lakhs covers her, her spouse and their 3-year-old daughter. Shilpa does not make a claim in the first policy year, and her health insurance company offers a 10% increase in the sum insured in the form of a cumulative bonus, sometimes called family bonus. This way, Shilpa gets to increase the claim amount of her policy.

Year	Cumulative Benefit	Sum Insured
Year 1, the year of policy purchase	–	₹10,00,000
Year 2, the first claim-free policy year	10%	₹11,00,000
Year 3, the second claim-free policy year	20%	₹12,00,000
Year 4, the third claim-free policy year	30%	₹13,00,000
Year 5, the fourth claim-free policy year	40%	₹14,00,000
Year 6, the fifth claim-free policy year	50%	₹15,00,000

Note: These illustrations are only tentative. Actual discounts may differ from plan to plan.

So, we can see that at the time of policy inception, Shilpa had a claim amount of ₹10,00,000, whereas, in a few years time, the claim amount reached ₹15,00,000. Keep in mind that the terms and conditions for cumulative bonus vary from company to company. Make sure to check the same with your health insurance company.

2. Premium Discount

Under this type of NCB, your insurance provider provides you with a discount on your upcoming premium. If you do not make a claim during the policy year, your premium amount decreases, but the claim amount remains the same.

For example, at the time of policy purchase, you pay ₹15,000 for the coverage. If you do not make any claims that year, your insurance company will offer you a 10% NCB. So when you renew the policy, instead of ₹15,000, you would have to pay only ₹13,500.

Keep in mind that a lot of factors go into deciding the health insurance premium. And while the NCB will help in getting the premium down, there may be other costs attached to the coverage.

Things to know about no claim bonus in health insurance

Keep the following things in mind when you have a health insurance policy:

While most health insurance companies offer an NCB to their policyholders, it is not a mandate. Your insurance provider may or may not provide this no claim or cumulative bonus.
How much discount the NCB will fetch you, or the no claim bonus limit is also something that is specific to your health insurance policy.
While most insurers offer monetary benefits, some insurance companies/ plans offer no claim bonus in the form of wellness programmes. You may or may not be eligible for a discount on the premium with such plans.
Most health insurance companies provide NCB and/or cumulative bonus in health insurance for family floaters as well as individual health insurance plans.
Unlike NCB in car insurance, you can transfer the health insurance no claim bonus when you are porting to a different health insurance company.
Your health insurance policy is your safety net in case you or an insured member needs to undergo medical help. However, when a claim is to be raised, make sure to analyse your options. Compare the cost of hospitalisation with the discounts you can expect in the upcoming years. Making a claim might not always be the best possible option.

Note: Read your policy document carefully and check with your insurance provider about the no claim bonus that you can expect.

Conclusion

NCB offers a discount on premium renewal, encouraging individuals to stay healthy and minimise claims, ultimately saving money while maintaining coverage for unforeseen medical expenses. It is an additional enhancement to the financial protection offered by health insurance. This incentive not only advocates a healthy lifestyle but also motivates individuals to utilise their insurance coverage when faced with urgent medical requirements and not make small claims.

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