How No-Claim Bonus Differs from Cumulative Bonus
When we speak of health insurance, we all love incentives for staying healthy and avoiding claims. That’s when the phrases No-Claim Bonus (NCB) and Cumulative Bonus in health insurance usually enter the scene. Both do sound the same, but they don’t sound the same. People tend to believe they are the same thing, but little differences lie in store that might affect your overall cover and benefits.
Let’s understand it in simple words.
What Is a No-Claim Bonus?
A No-Claim Bonus is an incentive your health insurance company offers you if you do not make any claims for a policy year. It is a gesture of “thank you” for being healthy.
For instance, let’s say you have a health insurance policy of ₹5 lakh. If you don’t file any claim in the first year, your insurer can enhance your sum insured by 10% or even give you a discount on your subsequent premium. This bonus continues to accumulate for every claim-free year, subject to a limit.
So, in other words, No-Claim Bonus = rewards for not availing your insurance.
What Is a Cumulative Bonus in Health Insurance?
Now, let us learn about the cumulative bonus in health insurance. The term specifically means the boost in your sum assured for each year you don’t file a claim.
Consider it your coverage accumulating with your healthy years. If your plan comes with a 10% cumulative bonus, then each year you don’t use your coverage, your overall coverage grows by 10%—all without raising your premium.
Taking the same example of a ₹5 lakh policy, after one claim-free year, your cover increases to ₹5.5 lakh (in case of a 10% bonus). After two years, up to ₹6 lakh and so on, up to the maximum limit provided by the insurer.
Thus, the cumulative bonus = your insurance cover grows over the years.
Key Difference Between the Two
The key difference is how the benefit is provided:
No-Claim Bonus is a more general term and may either refer to a premium discount or a rise in sum insured.
Cumulative Bonus, however, refers specifically to an increase in your sum insured amount at the end of every claim-free year.
In easy words:
All cumulative bonuses are types of No-Claim Bonus, but not all No-Claim Bonuses are cumulative bonuses.
Why is it important for you
Realising this distinction assists you in making wiser choices while renewing or comparing medical insurance policies. If you desire your coverage to increase without additional expense, search for policies with a cumulative bonus in health insurance. However, if you are inclined more toward minimising your renewal price, a No-Claim Bonus in the way of a premium rebate may be your best bet.
Either way, they reward your healthy ways and earn you some financial cushion when medical crises hit.
Conclusion
No-Claim Bonus and Cumulative Bonus in health insurance might seem similar, but understanding them can ensure that you receive the best from your health insurance. So, the next time you’re going through your policy, read the fine print to learn how your insurance company rewards your years of claims-free record—it could become a significant factor in your long-term health coverage.
