What Is No Claim Bonus (NCB) in Health Insurance? A Complete Beginner’s Guide

What is No Claim Bonus in Health Insurance?

Health insurance no claim bonus is simply a reward for policyholders when they make no claim in a policy year. Given the insured's good health, the health insurance providers grant this benefit in various forms. With each consecutive claim-free year, the sum insured may increase, a discount may be applied to the upcoming premium, or other benefits/ bonus values may be offered.

Types of No Claim Bonus in Health Insurance

Based on the nature of the reward, the no claim bonus in health insurance is divided into two types. These are:

Increase in Sum Insured

The cumulative bonus is essentially a reward in which the sum insured increases with each claim-free policy year, without any additional premium. Usually, insurers add a percentage of the base cover each year, allowing policyholders to increase their coverage gradually.

This additional sum insured can be used for future hospital stays, thus giving a better financial safety net against escalating medical costs. The bonus typically accumulates up to a certain limit set by the insurer, as long as no claims have been made.

Discount on Premium

Some health insurers provide NCB as a discount on the renewal premium that changes the grant of the sum insured. Each year the policyholder refrains from making a claim, the insurer reduces the premium payable at renewal by a certain percentage.

Although the coverage amount remains the same, the policy becomes more affordable over time. This type of NCB is good for those who want to save on premiums instantly rather than getting higher coverage.

Advantages of No Claim Bonus

Some of the highlighted benefits of no claim bonus in health insurance are as follows:

Lower Premium Costs

No claim bonus is one of the ways in which you can reduce health insurance premiums by a considerable margin. It lets policyholders avail comprehensive medical coverage at a lower premium amount.

Higher Sum Insured

NCB in health insurance can also help you enjoy an increase in the sum insured of the policy. This additional coverage can help you cope with expensive medical treatments without increasing the premium load.

Improved Financial Protection

As one gets older, medical needs and treatment costs increase. The original sum insured may not be enough, but the accumulated no-claim bonuses can be used to increase the coverage and thus provide better financial support to you and your family.

Portability Benefit

No-claim bonus is a privilege that can be transferred from one insurer to another. When changing insurance providers, the NCB earned with the current policy can be carried over to the new policy.

Discourages Frequent Claims

NCB in health insurance motivates policyholders to maintain good health. Besides that, it also helps in reducing minor claims, as people may prefer to pay small bills themselves in order to keep premium discounts or accumulated bonuses.

Things to Know About NCB in Health Insurance

To completely understand what is no claim bonus, here are a few things you must know about it. Keep in mind that the NCB benefit may vary from plan to plan:

Transfer of NCB

When a policyholder decides to change health insurer and moves from one health insurer to another, no claim bonus can also be transferred. Thus, the new insurer gets to know about the continuation of the benefits without any loss from portability, as the entire bonus is carried forward to the new insurer.

NCB Protect Add-on

The NCB Protect is an add-on cover that saves up the no-claim bonus even when you raise a few claims during the policy year. The limit of claims under NCB Protect may differ from one insurer to another.

Lapse of NCB

NCB might lapse if the health insurance policy is not renewed within the designated grace period. In the event of a break in policy continuity, one may lose accumulated bonuses and have to start earning NCB from the base coverage again.

Redeeming NCB

NCB in health insurance can be redeemed during policy renewal. It helps you get a premium discount or an increase in the sum insured amount. The use of the NCB varies among insurers and is subject to the terms of the policy.

Impact of Claims on NCB

Typically, a claim made in the course of the policy year results in a lapse of no claim bonus. It starts again when you raise no claim in a policy year. This is when add-ons like NCB Protect can become useful.

To Conclude

Health insurance no claim bonus is one among several discounts and benefits that your health insurer may provide. To avail of these discounts and ongoing offers, it is crucial to renew your policy on time. At Jio Insurance Broking, we make purchasing and renewing health insurance easier. During renewal, you may also compare different health plans to choose the one that best suits you.

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