Unravelling The Mystery Of No Claim Bonus

What happens to your premiums if you don’t file a claim in your Health Insurance policy? It goes completely to waste, right?

Wrong! You earn a “No Claim Bonus”!

Now what exactly is a “No Claim Bonus”?

No Claim Bonus (NCB) is a bonus that the insurer pays to the policyholder for not filing a claim in the entire policy year, i.e. a claim-free year!

But what type of “bonus” do health insurers give to their policyholders? Is it a reduction in premium or an increase in coverage? Well, it could technically be either or both or it could be something else as well!

Since Health Insurance plans could be of multiple types, even NCB can have multiple variations.

Let’s understand this with an example.

So Rahul has an Rs. 5 lakh policy, which he didn’t use for an entire policy year. So, when renewing the plan again, he is eligible for an NCB wherein it could be:

1. A reduction in his premium.

2. An increase in his coverage to say 10 or 20% so that his effective Health Insurance coverage could be Rs. 5.5 or Rs. 6 lakhs! This is called Cumulative Bonus.

3. Or he could get wellness benefits like Health check-ups, gym membership, fitness equipment, etc. Some insurers link this benefit to steps walked or health check-up reports as well. 

Some Health Insurance plans offer Super NCB benefits as well for enhanced/increased coverage. 

Points to keep in mind:

1. Usually, the rise in coverage due to NCB is not permanent. It could reduce concurrent claims.

2. There is a limit to the increase of coverage due to NCB. Usually, it could be a maximum of 50-100% of your base sum insured, but in some plans, it could be even higher. Even then, a “limit” would be specified.

3. NCB is applicable in indemnity Health Insurance plans only, both individual and family floater plans.

NCB is a great add-on that you can consider in your Health Insurance plan at the time of opting for it, especially when you are younger and fitter with relatively lesser chances of healthcare need. However, do remember to read the fine print so that you know exactly what you have in store for the future!