Imagine this – you’re a healthy 20-something-year-old who purchases a health insurance policy from a reputed insurer. Years go by, and you still haven’t made a single claim.
Unfortunately, your health insurance policy is just like your gym membership you haven’t used in years. But unlike your gym membership, not using your health insurance is a good thing—it indicates that you’re as healthy and fit as you were in your youth.
But by now, you’re probably wondering if there are any benefits to not using your policy.
This is where a No-Claim Bonus (NCB) comes into play.
Top 5 things to know about No Claim Bonus (NCB) in Health Insurance
If you are planning to purchase a health insurance plan and are keen to know about No-Claim Bonus, here are a few highlighted pointers -
1. What is a No-Claim Bonus in Health Insurance?
If you do not file a claim in a given year, insurers usually offer you an additional sum insured for the following year as a bonus. This is called a no-claim bonus (NCB). An NCB rewards you for maintaining your health and not making any claims during the policy year. This can significantly enhance your coverage without increasing your premium.
Sometimes, it can even increase your insured sum to 5 or 6 times the base sum. This makes it a valuable feature to look for in health insurance policies. However, this bonus does not always need to increase the sum insured. It can also result in a reduced premium for the next policy year.
Heads Up: It takes an average person up to 5 hours to read & analyze a policy, and 10 hours or more to compare different plans and make a decision.
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2. What are the Types of No-Claim Bonus?
a. Cumulative Bonus: A cumulative bonus adds a percentage of your base sum insured to the next year’s total sum. For instance, if your base sum insured is ₹5 lakhs and your policy offers a 50% cumulative bonus, the sum insured for the next year will be ₹7.5 lakhs. Another variation feature is that the unused amount from the previous year is carried over to the next year, as in Niva Bupa ReAssure 2.0.
b. Discount on Premium: Instead of increasing the sum insured, some insurers offer a discount on the premium for the next policy year. This means you pay a lower premium while retaining the same level of coverage. However, this is not commonplace nowadays.
3. How does a No-Claim Bonus Work?
A No-Claim Bonus rewards you for not making any claims during a policy year. This reward increases your sum insured for the following year. And if you don’t make any claim the next year, the bonus accumulates up to a certain percentage on the base sum insured, providing significant benefits.
Let's understand this with a scenario: You have a health insurance policy that offers a 20% no-claim bonus up to 100%. Over 5 years, you haven't made any claims, so your sum insured has increased significantly. One day, you make a claim that exceeds your base sum insured, but thanks to the accumulated NCB, the entire claim is covered.
On the other hand, your friend has a similar policy but without a no-claim bonus. Around five years after purchasing the policy, he was diagnosed with a major illness; the treatment costs exceeded his base sum insured. Without the NCB, he must pay out of pocket for the amount exceeding his base sum insured.
4. What are the Features of a No-Claim Bonus?
a. Not Transferable When you port a health insurance policy, the no-claim bonus is not transferable to the new policy. However, you can increase your sum insured up to the base sum insured plus the no-claim bonus in the new policy without any waiting periods imposed.
b. Clawback Clawback is a feature that reduces the no-claim bonus if you make a claim in any given year. For example, if you have a policy with a 20% NCB and make a claim, the NCB for the next year will be reduced by that same 20%. This is why some insurers offer policies without a clawback to maintain the accumulated NCB despite making a claim. Note: The percentage is always on the base sum insured and not the accumulated amount.
5. What is a NCB Waiver Rider?
For policies with a clawback, a no-claim bonus waiver rider ensures that your NCB remains unaffected even if you make a claim. For instance, the Protector rider from HDFC and the SafeGuard rider from Niva Bupa offer this feature, which lets you retain your NCB despite making claims.
Why Should You Purchase a Policy with No Claim Bonus?
One of the primary reasons why a policy with a good no-claim bonus is recommended is because it allows you to get a higher sum insured without increasing your premium. This means you can access premium healthcare at a fraction of the cost.
It is also particularly useful in family floater policies, where multiple members are insured under the same policy. If more than one person is hospitalised in the same policy year or if the same person is hospitalised multiple times, the NCB can provide additional coverage, ensuring that all medical expenses are covered.
With that said, here are some of India's top health insurance policies with a good no-claim bonus.
What are the Best Health Insurance Policies in 2024 with a good No-Claim Bonus?
- HDFC ERGO Optima Secure: HDFC Optima Secure is a health insurance plan with coverage ranging from ₹5 lakh to ₹2 crore, with 2X coverage from day 1. This policy includes benefits such as no room rent limits, home care treatments, and no sub-limits on any disease. It offers features like Enhanced No-claim Bonus and Secure Benefit, which restores the sum insured automatically after the first claim, making it an ideal choice for people prone to frequent hospitalisation.
Drawbacks: This policy is priced a little higher than the other ones.
2. Care Supreme: Care Supreme offers high-sum insured options and benefits like no disease-wise sub-limits, no room rent capping, and coverage for alternative treatments under AYUSH. It includes annual health check-ups and a Super NCB that increases the sum insured by 100% each year up to 500%.
Drawbacks: With Care, we feel that the operational metrics could be slightly better.
3. Niva Bupa ReAssure 2.0: Niva Bupa is known for its robust coverage options and industry-first features. Keeping up with this trend, this policy offers unlimited restoration, booster benefits for the unutilised cover amount, and several useful add-ons which enable you to customise your policy as per your needs.
Drawbacks: Once again, with Niva Bupa, we feel that the operational metrics could be slightly better.
4. Aditya Birla Activ One: Aditya Birla Activ One is a comprehensive health insurance policy focusing on wellness and preventive care. This plan is ideal for individuals who prioritise maintaining a healthy lifestyle and want to earn rewards such as discounts on premiums for their efforts.
Drawbacks: While Aditya Birla has shown promise with its comprehensive health insurance offerings, it is relatively new in the market. As such, monitoring their performance and customer reviews may be prudent before making a final decision.
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Conclusion
Choosing a policy with a good NCB can enable you to access superior healthcare without increasing your premiums, providing peace of mind and financial security. It is especially beneficial for family floater policies, offering extra coverage when needed the most.
As always, compare different policies and select one that aligns best with your healthcare needs. If you still need help, feel free to contact an IRDAI-certified Insurance Advisor for expert advice!
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