What is NCB in Health Insurance?

Who does not like rewards? We are always on the lookout for better deals, bargains, discounts, cashbacks or rewards on every purchase we make. No-claim bonus (NCB) is a reward the health insurance companies give to their policyholders, who have not made a claim. Read on further to know more about it.

What is no-claim bonus in health insurance?

No-claim bonus in health insurance means a monetary benefit given to policyholders for every claim-free year.
The reward is given because you stayed fit during the policy period and did not make any claim on your health insurance policy. Your insurer did not have to compensate you for any of your medical bills in that particular period. It, therefore, decided to pass on some benefits to you in the form of a no-claim bonus. The reward encourages policyholders to remain healthy and fit.

Different types of no-claim bonus

There are two types of no-claim bonus for health insurance - discount on premium and cumulative benefit.

Discount on premium: Under this type of NCB health insurance benefit, the insurer offers a discount on your next premium for every claim-free year. This means that for the same sum insured, you would need to pay a lower premium amount only. Suppose you have bought a health insurance policy with a sum insured of Rs 10 lakh and paid a premium of Rs 10,000 (to be paid annually). And your insurer was offering NCB in the form of a 5% discount on premium. If you did not raise any claim that year, then your premium amount for the next year would be Rs 9,500 (5% discount on Rs 10,000), while all the other benefits and the sum insured stayed the same.

Cumulative benefit: Under the cumulative NCB benefit, the insurance company increases the sum insured or coverage amount of your policy for every claim-free year while keeping your premium amount the same. So, taking the above example, if your insurer offers a cumulative benefit of 5% as NCB, then your sum insured for the next year would increase to Rs. 10.5 lakh while your premium amount would stay the same at Rs. 10,000.

Key points

- Health insurance no-claim bonus comes with a maximum benefit limit, which varies from insurer to insurer. Generally, the cumulative benefit is capped in the range of 50-100%. This means that if you do not raise a claim for many consecutive years, you can increase the sum insured of your policy by a maximum of 50-100%.

- Similarly, if you are entitled for an NCB benefit in the form of a discount on premium, you might be able to decrease your premium amount by a maximum of 50%.

- No-claim bonus in Mediclaim policy is transferable. This means that the bonus earned on a particular health insurance policy can be transferred to a new policy if you wish to switch to a new health plan or a new insurance provider.

- Lastly, remember that not every insurer in India provides no-claim bonus on health insurance. So, while buying the policy, do read the policy document carefully to check whether the insurer has the provision of NCB and, if yes, then what is the maximum benefit you can accumulate.

No-claim bonus can prove to be a smart way of boosting your health insurance coverage over the long term. So, it is advisable to file a claim only when necessary and not get lured by compensation for little expenses.

Disclaimer: The above information is indicative in nature. For more details on the risk factor, terms and conditions, please refer to the Sales Brochure and Policy Wordings carefully before concluding a sale.