Quick Overview
Several health policyholders in India go without making a claim each year. The cumulative bonus exists to reward this behavior by gradually increasing your coverage over time.
It sounds compelling. A ₹5 lakh policy can quietly grow into ₹10–₹20 lakh without you paying anything extra. But does this actually protect you when a large hospital bill hits? And what happens to this bonus once you finally make a claim?
Let’s break it down in this guide.
Factors Affecting Cumulative Bonus in Health Insurance
Claim History
If you make a claim during the policy year, the cumulative bonus may be reduced or reset to zero, depending on the insurer’s terms. Some policies allow retention of this bonus even after a claim.
Maximum Limit (Capping)
Most insurers cap cumulative bonus between 50%-500% of the original sum insured. Once this limit is reached, the bonus stops growing even if you continue to have claim-free years.
Policy Renewal Discipline
If you fail to renew your policy on time, you may lose your accumulated bonus. While insurers usually offer a grace period (e.g., 30 days), any lapse beyond that can reset your bonus entirely.
Type of Cumulative Bonus
Some insurers offer a cumulative bonus either as an increased sum insured or as premium discounts. The impact of policy terms and claims varies based on the type of bonus offered in the health insurance policy.
Portability
When you port a health policy, continuity must be given “to the extent of the sum insured under the previous policy and the cumulative bonus, if any (as per IRDAI guidelines).” In practice, how this is honoured can vary.
Changes in Policy Terms
Insurers may revise bonus terms at renewal, so it’s important to read policy updates. Some insurers may even modify the bonus percentage or claim impact during policy upgrades.
Types of Cumulative Bonus in Health Insurance
In India, cumulative bonus is categorized into four types:
Type 1: Classic “No-Claim” Cumulative Bonus (with clawback)
This is the traditional version of the cumulative bonus system. You earn a bonus only in claim-free years. If you make a claim, your bonus is reduced in the same proportion it was given or reset to zero, known as a "clawback."
Key Features:
- Bonus increases only in claim-free years.
- Claims reduce or reset the bonus.
- Example: 10% per annum, up to 100% of the base sum insured (SI).
- No claim: +10% every year.
- Claim: Bonus goes down (or resets to zero), as per the policy wording.
Example: Aditya Birla Activ Fit Plan
Type 2: Loyalty / Guaranteed Cumulative Bonus (Claim-proof)
Here, the insurer increases your coverage every year as long as you renew the policy, regardless of whether you make claims. So these are not traditional “no-claim bonuses” but instead rewards for loyalty and continued policy renewal.
Key Features:
- The bonus accrues each year you renew the policy (even if you’ve made a claim).
- Claims do not reduce past bonuses.
- Easier to rely on during frequent claims
Examples: HDFC ERGO Optima Secure, Care Supreme, and Aditya Birla Activ One Max (refer top plans in table below).
Type 3: Super / Booster Cumulative Bonus Add-ons
Some policies offer additional bonuses that allow you to multiply your cover beyond the standard bonus amounts. These are typically paid add-ons that sit on top of the in-built bonus.
Key Features:
- Paid add-on.
- Allows coverage to grow multiple times the base sum insured.
Example: Care Supreme with cumulative bonus super/booster add-on
Type 4: “Carry-forward” Bonus or Unused Sum Insured Pool
Instead of a fixed annual percentage, some plans carry forward unused portions of your base sum insured into a pool that can be used in future years.
Key Features:
- No fixed annual CB percentage
- Bonus accumulates only if claims are low or absent
- Pool can grow significantly over time
Example: Niva Bupa ReAssure 2.0 Titanium+ (refer table below on top plans).
Top Health Insurance Plans in India That Offer Cumulative Bonuses (Ditto’s Cut)
*P.A. stands for per annum.
Check this guide to understand how we evaluate our recommended plans.
What are the Benefits of a Cumulative Bonus in Health Insurance?
How Does Cumulative Bonus Work in a Health Insurance Policy?
Let’s consider a few examples to understand the role of cumulative bonus health insurance.
Claim-Linked Cumulative Bonus (Traditional Bonus)
Original Sum Insured: ₹5 Lakhs, CB: 10% per claim-free year up to 100%
Guaranteed Cumulative Bonus (Non-Claim Dependent CB / Loyalty Bonus)
Original Sum Insured: ₹5 Lakhs, Guaranteed CB: 10% annually up to 100%
Did You Know?
In practice, almost all popular retail health plans in India reward claim-free years with a cumulative bonus (an extra sum insured).
A pure no-claim discount on premium is still rare, but not impossible. A good example is United India’s Family Medicare policy, which offers a no-claim discount on renewal premium for each claim-free year, capped at a fixed percentage.
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Ditto’s Take on Cumulative Bonus
A cumulative bonus in health insurance protects you against inflationary increases, without increasing your base sum insured. It’s also a marketing tool for insurers to retain their customers. However, the bonus amount is capped in most cases. A few insurers have also launched add-ons with 100% P.A. up to unlimited accumulation (e.g., Care Supreme’s cumulative bonus booster).
The question is: should you get a cumulative bonus or just buy a higher base cover? At Ditto, our advisors recommend treating CB as a nice-to-have buffer, not the backbone of your protection. It is beneficial for long-term, low-claim customers.
Here are two cases we see where taking a CB can be risky:
- A 30-year-old buys only ₹5L base cover assuming it will “eventually become ₹20–30 lakh.”
- If a huge claim hits in Year 1 or 2, the bonus hasn’t built up yet and the insured is stuck at a low cover when it matters most.
Bottom Line
Frequently Asked Questions
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