What is No Claim Bonus in Health Insurance?

No Claim Bonus in health insurance is a type of monetary benefit given to the policyholders for each claim-free year. There are two ways in which NCB in health insurance works. In the first instance, the sum insured under a health insurance plan will increase for the policyholder for each claim-free year. Alternatively, if the policyholder does not make any claims during a policy year, the insurance provider might reduce their insurance premium cost at the time of renewal.

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What Is NCB In Health Insurance?

A No Claim Bonus (NCB) is a very beneficial feature that is common in health insurance plans today. It is a kind of incentive that your health insurance provider offers you in case you do not raise any claim during the policy year. The incentive can be offered as a discount or as an increase in the coverage. This is a kind of reward for maintaining your health and not claiming the benefit offered under the plan.

 

The No Claim Bonus (NCB) may be offered in different ways. For instance, it can be given in the form of an increased sum assured in the following year. Or, the insurer may offer you a lower premium for your policy.

Types of No Claim Bonus in Health Insurance

Primarily, there are two types of NCB in health insurance that you should know about. Here are all the details about them.

Cumulative Bonus

In this type of No Claim Bonus, you get the benefit of a progressive increase in the sum insured. So, if you make no claims throughout the policy tenure, your sum assured increases year after year progressively, for every claim-free year. This is known as a cumulative bonus.

Discount on Renewal Premium

Another kind of NCB is a discount on your health insurance renewal premium. In this case, if you have a claim-free year, the insurance provider will give you a discount on the health insurance premium when you renew your policy next year. The sum assured in this case will not be affected by the reduced premium.

How Does No Claim Bonus Work in Health Insurance?

To understand how the No Claim Bonus in health insurance works, you need to look at an example for each kind of NCB as explained above. Let us look into a couple of instances that can offer more clarity on how NCB in health insurance works.

How Does NCB for Increased Coverage Work?

Say you have a health insurance plan that offers NCB in the form of a 10% increase in the insurance coverage. And let us assume that the initial coverage offered at the time of purchase is Rs. 2,00,000.

 

Now, if you do not raise any claim on the policy during the policy term, your insurance coverage will increase by 10%, to Rs. 2,20,000 upon renewal.

How Does NCB for Discounted Premium Work?

Now, let’s say you have a health insurance plan that offers NCB as a discount on your renewal premium. And say you initially have to pay Rs. 10,000 as premium annually when you purchase the plan.

 

After a claim-free year, when you have to renew the policy, your renewal premium will be less than Rs. 10,000, thanks to the discount offered. The exact amount of discount depends on the terms and conditions of the policy.

How Much Will the Sum Insured Increase under Cumulative Bonus?

In the case of a health insurance plan that offers NCB in the form of increased coverage, there is no set percentage by which the sum insured will increase. The percentage of increase will depend on the insurance provider and on the policy you choose.

 

This is why it is essential to read your policy document carefully and check the terms and conditions thoroughly before you make your purchase.

Understand No Claim Bonus Better with an Illustration

Let us take the case of two different policyholders to understand No Claim Bonus better. We have two policyholders - each of whom is about to purchase a health insurance plan.

 

The first policyholder wants his insurance coverage to increase in the future, so he opts for a policy with an NCB in the form of increased sum assured for every policy-free year, by 10%. Initially, the sum assured is Rs. 10 Lakhs. But after one claim-free year, his coverage increases to Rs. 11 lakh. This continues until the sum assured reaches the limit set by the insurer.

 

The second policyholder, on the other hand, wants to reduce his future insurance costs. So, he opts for a policy that gives discounts on the renewal premium instead. Each claim-free year brings down his insurance premium by 5%. So, in the first year, he paid an annual premium of Rs. 10,000. In the second year, this became Rs. 9,500. In this manner, the discounts continued till the limit mentioned in the plan’s terms and conditions.

Things You Should Know About NCB in Health Insurance

Before you go ahead and buy a health insurance plan that offers a No Claim Bonus benefit, you need to know some important things about this feature. Some of these essentials are explained below.

There is a limit on the benefits

As you have seen above, NCB can either give you increased coverage or reduced premium. However, neither the increase nor the discount is indefinite. There is a cap on the amount up to which your coverage can increase, or below which your premium cannot reduce.

NCB is applicable to individual and family plans

No Claim Bonus benefits can be available on both individual as well as family floater health insurance plans. So, in case of a family cover, if any member raises a claim, the NCB will not be applicable for that year.

The terms and conditions of the NCB are important

The terms and conditions of the NCB on each policy will be different. So, make sure that you read the details thoroughly before making your purchase. This way, you will be aware of the benefits as well as the limits on your plan’s NCB.

Do All Health Insurance Plans in India Offer No Claim Bonus?

No. Not all health insurance policies in India offer a No Claim Bonus. While most plans do, there are some policies that do not offer this feature. This is why it is important to do your due diligence before you purchase your policy.

 

If you are unsure about whether or not your policy offers NCB, you can always check with your insurance provider if this feature is available.

Conclusion

This sums up the fundamental aspects of a No Claim Bonus in a health insurance plan. Now that you know the details of the types of NCB and the key things to know about this, you can make informed decisions about buying your medical cover.

 

And once you know what kind of cover you need, you can visit Bajaj Markets and make your purchase through a simple and seamless process. Additionally, you can also use the health insurance premium calculator to check the cost of your preferred plan on Bajaj Markets.

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FAQs on NCB in Health Insurance

  • ✔️Will I lose out on the No Claim Bonus if I switch my health insurance policy?

     This depends on the terms and conditions of your old and your new health insurance plans. Typically, you will not lose the benefits. However, the level of benefits may change depending on the new plan you have taken.  

  • ✔️Will new policyholders be able to enjoy the NCB benefit?

     You cannot enjoy the benefit of a No Claim Bonus in the first year of the policy. You need to complete one full year without raising a health insurance claim to avail the NCB benefits.

  • ✔️Is it possible to get a 100% discount on the premium in accordance with the NCB benefits?

     There is a limit on the maximum amount of discount that the insurer offers on the renewal premium. Typically, this will be restricted and will not be as high as 100%, since that means your premium will effectively be zero. So, it is not possible to get a 100% discount.  

  • ✔️Can I choose what kind of NCB benefits to get from my plan?

     In most cases, the insurer will themselves decide whether a plan offers increasing sum insured or discounts on premium. You can read the policy documents and the terms and conditions to see what kind of benefits are offered, and you can choose a plan that meets your needs.

  • ✔️Is the No Claim Bonus benefit applicable to family floater plans too?

     Yes, both individual and family floater plans can offer NCB benefits. You can check the policy documents to see if your family floater health insurance plan offers these benefits.  

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