No Claim Bonus (NCB) is a discount or an incentive offered by the insurer for not making insurance claims in the first (or previous) year of the policy. In the case of no-claim in the first year, most insured companies offer 5% extra on the sum assured. Most of the health insurance companies reward the policyholders for maintaining good health and not applying for any claim during the first year. This bonus can be availed when you renew your health insurance policy.
There are two types of NCB. These include:
A progressive increase in the sum assured is known as a cumulative bonus.
The health insurance companies, which do not offer NCB, provide a rebate on the renewal premium to maintain their competitive edge.
With a no claim bonus, the premium payable after a claim free year decreases. Thus the sum assured increases by a minimum of 5% after the first claim free year. The cumulative bonus can be claimed for a maximum of 10 years.
The NCB that a policyholder is eligible to receive on the health insurance policy is stated in the policy document.
If your health insurance policy is not renewed by the due date, you will not be eligible for the bonus.
The rate of increase in the sum insured varies from 10%-50%.
In the case of family floater policies, any member of the family who is covered under the policy can use the NCB. IRDAI mandates that the total accrued NCB will not be wiped off after filing a low-value claim.
Let us take an example to understand how the concept of No Claim Bonus in health insurance works.
Suppose you have a health cover of Rs. 10 Lakh and under an NCB, the progressive increase in the sum assured is 5%. The cumulative bonus is Rs. 10.5 Lakh. If the claim-free period is two years, the increased sum assured will be –
Rs. 10.5 Lakh + (Rs. 10 Lakh*5%) = Rs. 11 Lakh.
Therefore, for each claim free year, you will receive an additional coverage of 5% on your base sum assured.
An important point to be noted is that the increase in sum assured for the subsequent year is calculated on the base sum insured and added to the previous year’s increased value.
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To summarise, no claim bonus in health insurance is like a reward from your insurance provider in the form of a discount for maintaining good health and not making any claims in the previous policy year. At Finserv MARKETS, you can avail no claim bonus on your health insurance policy and enjoy discounts on your policy renewal. You can also use our health insurance premium calculator available on Finserv MARKETS. The tool helps determine the premiums charged on your desired health insurance coverage. Based on the results, you will be a step closer to making an informed decision related to health insurance.
You will not lose the benefits, but the quantum of your benefits will change based on whether you have switched from an individual to a family floater policy or from a family floater to an individual policy. It will also be seen whether the sum insured has increased or decreased.
The new co-policyholders will have to a complete one full year of claim-free period to avail of the benefits.
Certain insurance companies do provide add-on on the no claim insurance. This enhances the overall benefit of the policy.
If there is a claim made on two policies, the sum insured can be shared in the same proportions. However, as per the new IRDAI guidelines, you can now choose the insurance provider who will settle the claim.