What is No-Claim Bonus (NCB) in Health Insurance?
The No Claim Bonus in health insurance points to a reward that an insurance policyholder gets for maintaining better health and not claiming during a policy year. No claim bonus health insurance "No claim bonus in health insurance meaning" denotes that it is usually a bonus amount that gets added to your sum insured for each claim-free year in the first year. This discount accumulates over consecutive claim-free years, reaching a maximum of 50%. This increases the sum insured or reduces the premium. No claim bonuses are applicable in health insurance when you do not make any claim in a policy year. NCB in insurance is generally applicable when renewing a policy and can lead to massive savings on premiums. No claim bonus health insurance serves as an incentive for maintaining good overall health and abstaining from making claims. With each consecutive claim-free year, this bonus piles or adds up, thus raising the overall health insurance coverage without incurring additional costs. You must choose a health insurance policy with the maximum No Claim Bonus/Cumulative Bonus for each claim-free year so that your sum insured gets increased. The NCB amount in health insurance differs from one insurance company to another. Usually, insurers provide a discount of around 5-10% for each claim-free year. The maximum discount could go up to 50% following five years of the claim-free policy period.
Explaining No-Claim Bonus (NCB) in Your Health Insurance Policy
Your health is your most valued asset. Health Insurance plans can secure the health and financial future of yourself and your family. Having a Health Insurance policy has many benefits, such as coverage against medical expenses, a cashless treatment facility, wellness rewards, annual health check-ups, e-medical opinions and many more. Besides the usual benefits from the health insurance plan, there are other benefits that come to you when you have a health insurance policy that is continuously in force without a break. One such continuity benefit is a No-Claim Bonus (NCB) or Cumulative Bonus (CB).
What is a No-Claim Bonus?
No-Claim Bonus or Cumulative Bonus is an increase or addition in the Sum Insured granted by the insurer without any associated increase in Premium. In simple terms, it is a reward to the policyholders for not making any claims during the policy year.
Let’s say Ms Nila has bought a Star Comprehensive Health Insurance Policy for a Sum Insured of Rs. 5 lakhs. She would be entitled to the benefit of a No-Claim Bonus, calculated at 50% of the Sum Insured per year under her policy, following the claim-free years up to a maximum of 100%. Once the Bonus accrues under the policy, the limit of coverage for the policyholder for any subsequent claim will be the Sum Insured together with the Bonus.
How does No-Claim Bonus work?
No-Claim Bonus applies to both individual and floater Health Insurance policies.
Here is an example to show how the Sum Insured gets enhanced for every claim-free year by way of No-Claim Bonus.
Mr Sinha has a health insurance policy of Rs. 3 lakhs insured. Assuming his policy offers a No-Claim Bonus of 5% per claim-free year subject to a maximum of 25%, the year-wise Sum Insured, No-Claim Bonus and Limit of Coverage will be as shown in the table below (on the assumption there is no change in the Sum Insured year-on-year):
| Claim-free years | Sum Insured (Rs.) | Cumulative Bonus (Rs.) | Limit of Coverage (Rs.) |
| After 1 year | 3,00,000 | 15,000 (5%) | 3,15,000 |
| After 2 years | 3,00,000 | 30,000 (10%) | 3,30,000 |
| After 3 years | 3,00,000 | 45,000 (15%) | 3,45,000 |
| After 4 years | 3,00,000 | 60,000 (20%) | 3,60,000 |
| After 5 years | 3,00,000 | 75,000 (25%) | 3,75,000 |
The formula for the calculation of No-Claim Bonus and the rules for the utilisation of the same vary from policy to policy.
In some policies, if there is a claim, the bonus that has already accrued is reduced by one stage in the next policy period, depending on whether the bonus has been utilised for the purpose of the claim or not.
However, in the recently introduced policies of Star Health, such as the Star Women’s Care Insurance Policy and the Star Health Assure Insurance Policy, a vastly improved formula for a no-claim bonus has been introduced. Under these policies, the Bonus is reduced only to the extent utilised for the purpose of the claim and the balance, if any, is carried forward. Of course, no further bonus will accrue in the next policy period, based on the claim preferred.
For subsequent claim-free years, the policyholder will start earning the No-Claim Bonus once again till it reaches the maximum permissible percentage, which varies from 50% to 100% of the Sum Insured, depending on the type of policy.
Irrespective of the type of policy, the Bonus is always calculated as a percentage of the Sum Insured under the previous policy year, which was claim-free. If the Sum Insured is reduced at renewal, the Bonus shall in no case exceed 100% of the reduced Sum Insured, even though the amount of Bonus already earned may be higher.
What is the benefit of a No-Claim Bonus?
As mentioned earlier, with every claim-free year, the coverage limit will increase without any additional premium. This is beneficial, especially during current times when medical inflation is high and hospital expenses are skyrocketing. Depending on the type of policy, the benefit can be as high as 50% or 100% of the Sum Insured, which can be used by the policyholder for a single or multiple claims during the policy period. Thus, the benefit provides additional financial safety and security at no extra cost.
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The information provided on this page is for general informational purposes only. Availability and terms of health insurance plans may vary based on geographic location and other factors. Consult a licensed insurance agent or professional for specific advice. T&C Apply.