How to get the best of your NCB or cumulative bonus

Life’s objective may differ for different people; it may be meaningful work to some while fulfilling their responsibilities to families or society to others. But on one aspect, there is complete agreement—living a healthy life.

No-claim bonus health insurance in India offers financial protection against the rising cost of medical treatment. For the insured, a no-claim bonus is an incentive for healthy living.

What is NCB in health insurance?

An NCB health insurance policy is a popular customer-friendly benefit that allows the policyholder to get a financial reward from the insurance provider for living a healthy life. The insured or the policyholder receives a reward for each claim-free policy year. Several health insurers offer a no-claim bonus for claim-free renewals.

Types of NCB:

Discount on premium: In this type of benefit, the sum insured remains the same, but the premium on renewal decreases by the specific percentage offered by the insurer as a reward.

How does it work?

Let us take a simple example.

Assume you have an NCB Health insurance policy for Rs 5 lakhs, which you purchased for a premium of Rs 5000. In the first policy year, you make no claims against the insurer.

Your insurance provider offers you an NCB of 10 %( or Rs 500 in this case) during the renewal of your policy; this means you have to pay a premium of Rs 4500(Rs 5000—Rs 500) for the renewal of your policy with the same terms/benefits.

A cumulative bonus in health insurance is calculated as a percentage of the insured sum value that is mostly applied to each of your claim-free years. This is another way the insurance provider rewards the policyholder for staying healthy. Some insurers provide cumulative bonuses irrespective of the claim. Fundamentally, it is a way of rewarding users for their loyalty or sticking with the same insurers year on year. 

What are the bonus rates?

Typically, insurers offer incentives like an increase in the total sum assured by 5 to 50 per cent. The cumulative incentive percentage, however, depends on a particular insurer.

With increasing competition in the health insurance sector, insurers regularly devise schemes/add-ons to make the bonus exciting and attractive to customers.

How does cumulative bonus health insurance work? 

Consider this example: You have purchased a specific health cover of Rs 10 Lakhs from an insurer. After a claim-free first year, you can get a 50% bonus on your renewal, increasing your sum assured to Rs 15 lakhs. 

The second policy year without claims again can raise your coverage amount to Rs 20 Lakhs, which is 100% more than your initial policy coverage amount. However, you can get a maximum increase of 100% in your original sum assured.

Who is eligible for cumulative bonus health insurance?

Individuals and Families;

You can avail yourself of the benefits of NCB under individual health coverage in India and also with family floater health insurance plans.

Benefits:

• Financial protection against unforeseen medical expenses
• Encourages you / your family to stay healthy
• Increases coverage amount without any additional payments
• If you decide to change your insurance provider, your accumulated NCB is transferable to the other insurer subject to specific terms/conditions
• The no-claim bonus is usually accumulated for up to ten years
• To avail of NCB, the policyholder must renew the policy before the expiry period

How do you choose the best policy with health insurance benefits?

Choosing the best-suited one for you among the available health covers in India requires studying and analysing various policy documents. Insurers use NCB as a significant marketing proposition.

A few primary factors for selection are the reputation/credibility of the insurer brand, the percentage of cumulative bonus each year, and similar factors.

However, A better way is to seek experts’ guidance online; Phone Pe, for example, is an online platform where you can get recommendations for the best-matched health policies for you.

Key Takeaways

Investing in health insurance protects you against the rising cost of medical treatment in India. NCB in health insurance can help increase your coverage without additional payments and act as a motivating factor in living healthily.