What is No Claim Bonus?

It’s a kind of incentive that a policyholder gets in return for not making claims on the health plan.

NCB on health insurance is the benefit you receive when you don’t have a claim during the prior policy year. 

This bonus continues to accumulate throughout the years every year that you are not a claim-free year up to a limit, and is applicable to both individuals and family floating basis.

Different types of No-claim bonuses

There are two kinds of no-claim bonuses for health insurance: discounts on premiums as well as a cumulative benefit.

Discount on Premium : 

Under this kind of NCB health insurance benefit the insurance company will offer an additional discount on your premium for each year that is not a claim-free one. 

That means for the same amount insured it is necessary to pay a lesser cost of premium in only. 

If you paid a monthly premium of 10,000 . Your insurer offered NCB as a five percent reduction on your premium. 

If you didn’t file any claim during the year, your premium for the following year will be Rs 9,500.

Original Premium 10,000 – (5%) discount 500 = 9,500 Discounted Premium

All other benefits and the amount of insurance remained the same.

Cumulative Benefit : 

As part of the cumulative NCB benefit an insurance company will increase the sum insured value of the policy each year that is not a claim-free one, while keeping your premium at the same. 

Suppose your insurance company gives you a cumulative benefit of 10% NCB the amount insured for the following year will increase to 10.5 lakh. Your premium would remain exactly the same, at. 10,000.

How does NCB work in health insurance?

As an example, suppose you have a no-claim health insurance with the sum insured at to be Rs. 5 lakhs. Your insurance company offers an additional 5% of your NCB health insurance each year that is not a claim free one with up to 50 percent. Therefore, the sum that you are covered after each year without a claim will be

In the first year after a claim-free year, the amount insured is Rs. 5 lakhs 25,000

After a second year of claim-free years, the insured sum is Rs. 5 lakhs 50,000

After a 3rd year without a claim, the insured amount is Rs. 5 lakhs, 75,000

As the limit for NCB in health insurance provided by your insurer is 50%, the total sum insured available for you becomes Rs. 7.5 lakhs.

No-claim bonus enables you for maximum coverage with an increased sum insured amount every year.

Key benefits of No Claim Bonus

Increased Sum Insured –

You get to save money upon renewal by getting more coverage at the same premium.

NCB is transferable –

Policy Holder who are unhappy with their current insurer and wish to port their policy to a better insurer can even get the NCB transferred to the new insurer.

Maximize Cover –

No-claim bonus enables you for maximum coverage with an increased sum insured amount every year.

The health insurance no-claim bonus is offered with an upper limit on benefits and varies from insurer to insurer. 

The cumulative benefit is set in the range between 50-100 percent. 

In other words, even if you don’t file an insurance claim for a number of years, it is possible that you may raise the amount insured under your policy up to the maximum amount of 50-100 percent.

Remember that not all insurers in India offers no-claim bonuses on health insurance. 

Therefore, when you purchase the policy, be sure to go through the policy documents carefully to see if the company offers NCB in addition.

If you are purchasing an insurance plan for health be sure to examine with the insurance company for the benefits provided by NCB. 

In the past, health insurance policies allowed for the growth of the amount insured by no-claim bonuses up to a certain amount i.e. up to 50 percent.

There are, however, health insurance plans in the market that permit you to increase the amount covered by as much as 200 percent.