Introduction
Arjun availed of a health insurance plan when he was 25. A couple of years down the line and he is yet to utilize the insurance coverage. He has been a health enthusiast with an enviable lifestyle & hence, never needed much medical attention.
So, logically speaking, since he is not utilizing the funding (and won’t probably need to, at least for a few years), shouldn’t he stop paying the premium, thereby mitigating his expenses?
Well, NO!
While there are fewer chances of him falling sick, when it comes to health, there are no guarantees. Health insurance plans are all about staying financially prepped for the unexpected. However, explaining this to all is a cumbersome process with no guarantees of a positive outcome.
So, what do insurers do to ensure that you are inclined towards continuing with your insurance even after a few years of no claims? They incentivize your continuity via a remunerative perk called No-Claim Bonus - a financial pat on your back as a reward for staying healthy.
This perk helps boost your insurance coverage while letting you continue the lower, pre-decided premium - a win-win situation for policyholders!
However, No-Claim Bonuses are much more than just a perk. Take a look at all that you would need to know about the perk, to tap into its comprehensive benefits!
What is No-Claim Bonus in a Health Insurance plan?
No-Claim Bonus is a remunerative perk offered to the policyholder by his/her insurer where the sum assured increases by a fixed % amount. This is a rewarding gesture on the part of the insurance provider for a claimless policy year, indicating good health sported by the policyholder. This remunerative benefit gets reflected in the bandwidth of the policy coverage.
Now, while all health insurance providers extend the No-Claim Bonus (NCB) perk, the % offered varies from one company to the other. The usual amount provided includes the following -
- 50% extending to a maximum of 100%
- 50% extending to a maximum of 200%
- 100% extending to a maximum of 200%
(examples of this have been cited below)
What are the Top Health Insurance Policies that Offer No-Claim Bonuses?
In case you have gone through our blog on ‘The Top Health Insurance Companies in India’ , you know that while multiple players across the insurance industry exist, only some meet up to the precise requirements.
Among these, some offer lucrative NCBs, making them incredible choices.
| Top Health Insurance Plans In India | No-Claim Bonus Offered | |||
|---|---|---|---|---|
| MINIMUM (for a claim-free year) |
MAXIMUM (of up to) |
|||
| HDFC Ergo Optima Restore | 50% | 100% | ||
| Care Care Plus | 50% | 200% | ||
| Niva Bupa ReAssure | 50% | 100% | ||
| ICICI LOMBARD iHealth Plus | 10% | 50% | ||
| Digit Insurance Smart Option | 10% | 50% | ||
However, please remember that this - NCBs cannot be the only parameter while deciding your final health insurer. We suggest you opt for our Health Comparison Tool to tally the best premium that caters to your medical and financial requirements.
You can follow this up with a scheduled call with one of our advisors [subtext: reach out to our advisor's link] to guide you through a transparent policy purchase process.
How Does No-Claim Bonus Work?
Let’s say you avail of a health insurance plan from one of the best insurance providers across the country (get a list of the best insurers from our blog - ).
Top Health Insurance companies of India
You opt for a policy offering INR 15 lakhs coverage, demanding an annual premium of INR 20,000, and providing an NCB of 50% that can go up to a maximum of 200%
Fortunately, for the first 3 years of availing it, you do not need the funding because you have been healthy as a horse. So, how much No-Claim Bonus can you accumulate?
| Initial Coverage: INR 15 lakhs Premium: INR 20,000 NCB: 50%. Can go to a maximum of 200% |
|||
|---|---|---|---|
| PARAMETERS | Base Coverage | Added coverage due to No-Claim Bonus | Total available coverage |
| YEAR 0 (when the plan is bought) | INR 15 lakhs | NA | INR 15 lakhs |
| 1ST YEAR (Claim-free) | INR 15 lakhs | INR 7.5 lakhs (50% of INR 15 lakhs) |
INR 22.5 lakhs |
| 2ND YEAR (Claim-free) | INR 15 lakhs | INR 15 lakhs (100% of INR 15 lakhs) |
INR 30 lakhs |
| 3RD YEAR (Claim-free) | INR 15 lakhs | INR 22.5 lakhs (150% of INR 15 lakhs) |
INR 37.5 lakhs |
What are the Features of a No-Claim Bonus?
No-Claim Bonus on health insurance plans is a rewarding perk. However, the major catch is that you only unlock this feature over a claim-free year across the policy's tenure.
However, what happens if you port your existing policy to a different insurance provider or make a claim after 2 years of no claim?
Before you jump at the prospect of such a perk and get influenced to purchase a health insurance policy, acknowledging and gauging these details will give you the upper hand to ask relevant questions to your insurer prior to availing of a policy.
Hence, you will be looking at a health insurance plan that best caters to your health and financial nuances.
- Not transferable in case of insurance portability
One can have multiple reasons to port their current health insurance plan to another insurance provider (the details of which you can learn from our portability blog )
But what if, by the time you decide to port, you are readily enjoying a 100% NCB on your premium coverage? Does this bonus get transferred too?
Well, no.
While you can enjoy the benefits of the waiting period perks on this NCB, the actual bonus amount added to your premium cannot be carried forward with another insurer.
2. Deductions in NCB upon raising a claim
By now, you know how NCBs work in a health insurance plan towards boosting the bandwidth of your coverage. However, what happens if you stay claim-free for 2 years and then make a claim in your 3rd year?
Before we cite you an example to understand this better, here is something that you need to know - there are two types of No Claim Bonuses -
- With clawback
- Without clawback
The best way to understand this would be the example sited below -
| Initial Coverage: INR 10 lakhs Premium: INR 15,000 NCB: 50%. Can go to a maximum of 100% |
||||
|---|---|---|---|---|
| PARAMETERS | Base Coverage | Added coverage due to No-Claim Bonus | Total available coverage | |
| YEAR 0 (when the plan is bought) | INR 10 lakhs | NA | INR 10 lakhs | |
| 1ST YEAR (Claim-free) | INR 10 lakhs | INR 5 lakhs (50% of INR 10 lakhs) |
INR 15 lakhs | |
| 2ND YEAR (Claim-free) | INR 10 lakhs | INR 10 lakhs (100% of INR 10 lakhs) |
INR 20 lakhs | |
| 3RD YEAR (INR 9 LAKHS CLAIMED) | INR 9 Lakhs (paid out of base coverage) INR 1 Lakh remains (base Amount) INR 10 Lakhs remain (NCB) Total coverage left to be claimed for the 3rd year = INR 11 Lakhs (1 Lakhs base + 10 Lakhs NCB) |
|||
| 4TH YEAR | WITH CLAWBACK | INR 10 Lakhs (renewed for the year) |
INR 5 lakhs - (50% of the base cover amount) (The NCB goes down by half as compared to the last no-claim year) |
INR 15 lakhs |
| WITHOUT CLAWBACK | INR 10 Lakhs (renewed for the year) |
INR 10 lakhs (the remaining NCB is continued for this year. But you won’t be getting any additional NCB since a claim has been made the last year) |
INR 20 lakhs | |
However, if in your claim year, the claim amount is greater than the base coverage offered, the calculations for Clawback NCB differs slightly. Here, take a look -
Let’s say the claim amount made in the 3rd year is INR 11 lakhs. The base amount is the first to be exhausted and then deductions are made from the NCB.
So,
- INR 10 lakhs is deducted from the Base, leaving INR 0 Base amount for the year.
- INR 1 lakh is deducted from the NCB of INR 10 lakhs, leaving INR 9 lakhs as the residual amount.
- Available total coverage for the claim year = INR 0 (Base) + INR 9 lakhs (NCB)
For the next year -
- Base = INR 10 lakhs (renewed for the year)
- NCB = INR 9 lakhs (the remainder from last year) - INR 5 lakhs (50% of your base cover). Thus, NCB = INR 4 lakhs
- Total coverage available for this year = INR 10 lakhs + INR 4 lakhs = INR 14 lakhs
On the other hand, apart from the clawback and no-clawback option, NCBs do have another type - not so much as a No-Claim Bonus, as it is a Loyalty Bonus.
In this, policyholders always enjoy a certain % of boost on their base coverage, irrespective of the claims made across the year. As the name indicates, this is a financial “thank you” from the insurer to the insured for the latter’s continued availing of services with the providers.
Unfortunately enough, this perk is not available for all plans or even from all insurance providers, and the feature does come with a specific list of eligibility requirements. In case you are interested, do ask an insurance expert to help
However, if in your claim year, the claim amount is greater than the base coverage offered, the calculations for Clawback NCB differs slightly. Here, take a look -
Let’s say the claim amount made in the 3rd year is INR 11 lakhs. The base amount is the first to be exhausted and then deductions are made from the NCB.
So,
- INR 10 lakhs is deducted from the Base, leaving INR 0 Base amount for the year.
- INR 1 lakh is deducted from the NCB of INR 10 lakhs, leaving INR 9 lakhs as the residual amount.
- Available total coverage for the claim year = INR 0 (Base) + INR 9 lakhs (NCB)
For the next year -
- Base = INR 10 lakhs (renewed for the year)
- NCB = INR 9 lakhs (the remainder from last year) - INR 5 lakhs (50% of your base cover). Thus, NCB = INR 4 lakhs
- Total coverage available for this year = INR 10 lakhs + INR 4 lakhs = INR 14 lakhs
3. Rider Benefit
Usually, when a claim is made, the policyholder loses out on their NCB. However, if you have opted for a safeguard rider on top of your existing policy, you have a specific cushion in your claimed amount beyond which the NCB is affected.
- In the case of SafeGuard rider from Max Bupa & Protector from HDFC, policyholders can claim up to INR 50,000 in a year sans affecting their NCB.
- In the case of Care Shield from Care, you can claim up to 25% of your policy coverage and still enjoy the perks of NCB.
The aforementioned 3 points throw some light on the perk in the discussion. But how is this perk specifically beneficial to you, the policyholders? Let’s find out
What are the Benefits of a No-Claim Bonus for a Policyholder?
- Extensive funds to meet high-end medical requirements
With a No-Claim Bonus, you can enjoy higher policy coverage on your current premium. This ensures that you have considerable savings in your budget while gaining access to substantial funding that meets premium healthcare services.
- Mitigated insurance renewal charges
Policyholders on the receiving end of NCBs pose a lower risk of payout. This influences insurers to offer insured individuals a lower rate for their policy renewals.
Types of health insurance policies that offer a No-Claim Bonus?
Most health insurance providers offer NCBs as an incentive for policyholders to refrain from making smaller claims. Instead, they are encouraged to accumulate their coverage and use the same to fund high-end medical treatment.
Since such a feature can benefit an extensive range of policyholders, they offer NCBs over multiple health insurance plans -
- Individual Health Insurance Policies
- Group Health Insurance Policies
- Family Floater Health Insurance Policies