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The money added in the sum insured in a health insurance policy for a claim free year is called as NCB or No Claim Bonus. An insurance holder should purchase a policy offering the maximum percentage of NCB for every claim-free year, as with higher NCB your sum insured will also get maximized. But it is important to know and understand all about your policy details before buying a plan to understand NCB better.
Let’s first know the term No Claim Bonus or what no claim bonus in health insurance means.
No claim bonus health insurance is a financial reward or bonus awarded to the owner of a policy in the sum insured if he/she doesn’t claim any medical coverage for a year. So, if a policy owner doesn’t fall sick or doesn’t claim health insurance for a year, he/she can receive the NCB as bonus reward.
NCB is a humble way through which insurance companies offer incentives to the policy owners for a no claim year. The policy owner can gain this monetary reward year upon year for making no claims. Thus, the No Claim Bonus is one of the most significant aspects to consider while choosing a health plan.
Health insurance companies normally offer two types of no-claim bonus.
Cumulative bonus is a benefit that is presented to the policy owner. Under cumulative bonus, for a claim-free year, the policy owner enjoys an increase in the sum insured by a certain percentage. However, this doesn’t affect the premium of the policy, which remains the same.
For instance, Rajiv bought a health insurance plan of Rs. 5,00,000, where he was assured by the insurance company a 5% No Claim bonus for each claim-free year. Now, he didn’t make any claims in the first year as neither he, nor anyone else in the family required a coverage for that year. So, his policy amount or sum insured for his policy increased by 5% to Rs. 5, 25,000. However, the premium he was paying remained the same. Thus, now Rajiv can use this entire amount with the added reward in case he needs to make a claim in the 3rd year of his policy.
In case of discount on premium, the policy owner gets advantage of a decrease in the renewal premium rate by a certain percentage for every claim-less year. However, in this case no changes were made to the amount of sum insured in your policy.
For instance, Shelly bought a health insurance policy of Rs 5,00,000 where she paid Rs.10,000 as annual premium. She was offered a 5% discount on renewal premium by the insurance company for each claim-free year as No Claim Bonus. Now, she didn’t use any coverage for the first year, so the company offered her a discount at the time of policy renewal. Thus, she has to pay Rs. 9,500 as the premium policy now. However, the sum insured in this case stayed the same.
Here are the benefits that a health insurance No Claim Bonus offers for policy owners:
Under cumulative bonus, the policy owner can have a gain of increase in the sum insured, but this gain is to a certain limit only. However, in general, the sum insured can be increased from 50% to 100% of the actual insured amount. But, you must note that terms and conditions for cumulative bonus differs depending on the insurance providers. And reading the policy document is a must to know the exact limit of the No Claim Bonus.
Yes, both individual and floater insurance plans offer No Claim Bonus. The individual health plan covers only the policy owner, while in case of floater plan coverage is offered to the entire family. And no matter what the insurance plan is, individual or floater, the benefit of NCB is available in both type of plans if the insured person hasn’t made use of the any claims in the entire policy year.
All health insurance plans available in India might not offer No Claim Bonus. However, the policies that do not offer NCB come up with other rewards and offers for the insurance holder. So, every policy owner must read the policy document very carefully before purchasing a plan to know if it offers no claim bonus or other worthwhile benefits.
In the present time, the rising cost of medical treatment and hospitalization charges makes it difficult for people to undergo or avail expensive health facility. Thus, No Claim Bonus serves as a profitable method to augment your health insurance policy. With No Claim Bonus, you can make sure that your health as well as the health of your near and dear is given appropriate medical attention in case of any medical emergency.
But remember to read the policy document in detail to understand every term and condition of No Claim Bonus and to avail maximum benefit from this feature of the policy.
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