No Claim Bonus (NCB) In Health Insurance: Benefits and Features

Health insurance is a type of insurance policy that covers the medical expenses related to hospitalisation and certain types of treatment of the policyholder. It is a financial safety net that protects the covered individual from incurring out-of-pocket expenses. However, health insurance comes with a set of advantages that go beyond providing financial coverage for hospitalisation. For instance, certain policies include critical illness riders, maternity benefits, and annual health checkups. 

But have you ever wondered what happens when your health insurance policy goes unused during the policy term? Health insurance is a gift that keeps on giving even when you don’t use it. Upon the non-usage of the policy, the insured gets a no-claim bonus. It is a type of reward that you get for maintaining good health. A no claim bonus helps you maximise the value of your policy.

Additionally, the Indian insurance regulator – IRDAI as part of their “Insurance for all by 2047” initiative, has introduced 5 key policy changes to help policyholders make the most of their health insurance coverage. Previously, the insurer would automatically increase the sum insured upon the non-usage of the policy. But now they get the option to either avail this reward as a cumulative bonus or as a discount on the premium, depending on their needs and usage. 

Let’s dive deeper into the workings of a no claim bonus and understand its benefits so that you can make the most of your health insurance policy.

What Is No Claim Bonus in Health Insurance?

A No Claim Bonus (NCB) in health insurance is a type of reward offered by the insurer to the policyholder. This reward is given to incentivise the policyholder for staying healthy and not raising a claim during the policy year. The main clause for availing this reward is that the policyholder shouldn’t raise a medical claim throughout the policy period. 

The primary reason why insurers offer this claim to policyholders is to ensure customer loyalty. Additionally, for the insurers, offering NCB is more feasible than settling medical insurance claims (which usually run into lakhs of rupees).

Eligibility Criteria For Availing No Claim Bonus In Health Insurance

Various factors influence your eligibility for availing a no claim bonus.

They are as follows:

• You can’t file a single claim during the policy period (most insurance policies in India have a policy period of 1 year)
• You must renew your policy on time without any lapses
• Your health insurance policy must have NCB as a benefit (most insurance policies come with NCB benefit, but it’s always good to be certain)
• NCB is also included in a family floater policy, but to be eligible for it, no family member should raise a medical claim
• In case you wish to port your health insurance policy to a different provider, then the transferability of NCB is subject to your insurance provider’s terms and conditions
• Some insurers have a minimum tenure requirement for you to be eligible for NCB (in most cases, the tenure is one year)

Also, read: Room Rent Limit in Health Insurance

How Does No Claim Bonus Work?

To better understand the workings of a no claim bonus, let’s first understand the two ways in which it can be rewarded. 

Two Ways NCB Rewards Are Offered

1. Enhanced Sum Insured or Cumulative Benefit: When NCB is rewarded in the form of a cumulative bonus, the sum insured of your health insurance policy is increased. No other changes are made to your policy or premium.
2. Premium Discounts: In case you do not wish to increase your sum insured, you have the option to get your no claim bonus in the form of a discount on your policy premium. In this case, the premium that you pay for your health insurance policy is slashed by 5-10% for every claim-free year.

No matter which of the two options you go for, you will have the assurance of mitigating unexpected medical expenses and financial aid in the form of a health insurance policy. A no claim bonus is just a cherry on top that makes being healthy a little more rewarding.

Now to understand how NCB works, let’s take the two aforementioned scenarios and see how either impacts your health insurance policy.

Scenario 1: When You Opt For A Cumulative Bonus

Let’s assume you took a health insurance policy with a sum insured of Rs. 5 lakhs.

And your insurance provider offers you a 10% cumulative bonus at the time of policy renewal for not making any claims. Your revised sum insured for the following policy period reaches Rs. 5.5 lakhs. Now add another claim-free year and your sum insured rises to Rs. 6 lakhs

However, do bear in mind that there is a limit to the cumulative bonus that you can receive. Usually, it is 50-100% of the original sum insured. For instance, if your insurance provider has a 50% cumulative bonus limit on the sum insured of Rs. 5 lakhs, then you’ll be able to enjoy 5 continuous claim-free years and your sum insured will rise to a maximum of Rs. 7.5 lakhs.

Scenario 2: When You Opt For A Discount On Premium

Let’s assume you took out a health insurance coverage of Rs. 5 lakhs for a premium of Rs. 5,000. 

You do not make a claim during the policy period and you opt for a discount on the premium as a way to get your NCB reward. Your insurance provider offers you a discount of 10% on the premium. So now you have to pay only Rs. 4,500 at the time of policy renewal. And your sum insured has no change, which means you still get the coverage of Rs. 5 lakhs but at the 10% less premium.

Most insurers provide a 5-10% discount on premiums for every claim-free year and you can get this discount up to 5 consecutive claim-free years.

Suggested read: What is Copay in Health Insurance?

How to Maximise No Claim Bonus Benefits

To make the most of your NCB:

• Choose policies with higher bonus rates and flexible caps
• Avoid making claims for minor health issues
• Opt for policies that have the option of NCB transferability in case you switch insurers
• Consider purchasing a family floater for better NCB rewards accumulation

Key Features of No Claim Bonus

1. Bonus Rate and Caps

In many cases, patients can schedule appointments for OPD treatment in advance, reducing the need to wait for long periods to see a healthcare provider. This helps improve patient satisfaction and allows for more efficient use of time for both patients and healthcare professionals.

2. Family Floater Policies

In the case of a family floater policy, the NCB benefit applies to all covered members, If no member makes a claim during the policy term, the bonus gets added to the policy at the time of renewal.

3. Transferability

Most insurance providers allow the transfer of NCB benefits, so you don’t necessarily lose your NCB at the time of switching insurance providers, on the condition that the new policy has similar terms.

Quick read: Waiting Period in Health Insurance

Benefits of No Claim Bonus in Health Insurance

1. Increased Financial Security: When you get rewarded a no claim bonus, you either get a higher sum insured or a discount on premium. Both of which are availed at no extra cost. 

2. Promotes Healthy Living: The NCB was introduced to encourage fewer claims, causing policyholders to adopt healthier lifestyles and manage minor health issues without relying on insurance.

3. Cost Efficiency: NCB is an economical feature that improves the coverage of your health insurance policy at no extra cost.

4. Flexibility: A no claim bonus applies to most health insurance policies, whether it is an individual policy or a family floater policy. This makes switching plans easier as you don’t lose your NCB benefits.

5. Increased Coverage Over Time: A no claim bonus helps improve your coverage over the years and protects you against inflation and rising healthcare costs.

Why Choose a Health Insurance Plan with No Claim Bonus?

Most insurance providers now offer coverage with NCB benefits. In the rare case that they don’t, we strongly advise you to not opt for health insurance coverage that doesn’t include no claim bonus. Here’s why a health insurance policy with NCB is the best option:

• Value for Money: NCB improves your coverage without increasing premium costs, which makes it a value-for-money purchase.
• Better Preparedness: If utilised efficiently over the years, NCB ensures that you stay protected against inflation and rising healthcare costs.
• Incentives for Healthy Living: By discouraging minor claims, NCB motivates you to adopt healthier habits, reducing long-term medical risks.

Recommended read: Grace Period in Health Insurance

Conclusion

Features like NCB make health insurance more rewarding and financially viable. Imagine yourself 5 years from today, when you have reaped the maximum benefits of not making claims because you opted for a healthier lifestyle.

Your health and well-being can not be equated to a financial benefit, but by getting rewarded for your good health, you’re securing a personal win as well as a financial win. But that being said, health insurance is always a valuable tool to have, and using it in the face of a medical emergency is advisable. 

By introducing and updating features like NCB, IRDAI is constantly working to make health insurance more affordable and user-friendly. And that’s why you should always stay updated about the amendments to policy changes. In addition to making NCB reward more flexible, IRDAI recently introduced 4 other changes to health insurance policies.

4 Other Changes Introduced by IRDAI to Make Health Insurance More Rewarding

The IRDAI has consistently worked to improve the value proposition of health insurance policies, and you can read them in detail here.

1. Higher refund on cancelling health insurance policies: Individuals can now cancel their health insurance policy whenever they want and get a refund on a pro-rata basis. Earlier, the refund was not provided on a pro-rata basis. As mentioned by the regulator, if the term is up to one year and no claims are made during the policy period, the refund will be a proportionate premium for the unexpired policy.

2. No health insurance claim can be rejected without the approval of the Claims Review Committee: Insurance companies will be required to set up a 3-member Claims Review Committee. No claims will be rejected without the approval of said committee.

3. Higher penalties for not complying with ombudsman orders: Now, insurance companies are required to pay more penalties in case of a delay in implementing an order of the ombudsman. Insurance companies are required to comply with the ombudsman’s order within 30 days.

4. Disclosure made by insurance providers on company website: To make it easier for consumers, the regulator has asked insurance companies to display the following information prominently on their websites:

• Cashless network of hospitals/healthcare service providers
• Hospitals/healthcare service providers that are on the common list of hospitals
• Information pertaining to reimbursement for non-empanelled hospitals
• Turnaround time for policy servicing, cashless approvals, and reimbursement claim settlement

Want to make the most of your health insurance policy? Learn everything there is to know about health insurance with Onsurity. 

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