If you are planning to buy health insurance then there are a large number of concerns that could be weighing on your mind such as the coverage it offers, waiting period of some diseases before they are covered, coverage of consumables, and so on and so forth.
On the top of all of these, it is recommended to check the no-claims bonus that inflates the size of your total sum assured, effectively offering a wider coverage in the following years for a lower premium.
So, before we proceed further — let us understand what exactly is a no-claims bonus.
What is a no-claims bonus?
It is an incentive given by an insurer in the form of wider coverage of sum assured to those customers who did not happen to make a claim during the year gone by. It is a form of a bonus given by the insurance company to its healthy customers who are perhaps less likely to fall ill and apply for a claim in the following year.
“No claim bonus is most common in health and motor insurance. It is a very good feature to have in both. In health insurance, one should pay particular note to what happens to this after a claim. In some cases, there is a small reduction whereas in others it gets done away completely,” says Kapil Mehta, Co-founder, SecureNow Insurance.
There are a number of advantages of policies with no-claims bonus which include long-term cost savings and a higher incentive for a healthy lifestyle.
"Policies with No claim bonus incentivize the policyholders to maintain a healthy lifestyle and seek preventive healthcare measures, as they stand to benefit from getting the bonus sum insurerd at no additional cost. In fact there are now plans in the market that help policyholders increase their sum insured by upto 10x to strengthen their safety net effectively," says Siddharth Singhal, Business Head, Health Insurance, Policybazaar.com.
Which insurance policies offer it?
The no-claims bonus is usually offered in almost all the health insurance plans. And almost all insurers offer a no claims bonus (NCB) to its current customers. Some offer a small bonus of 10 percent in the second year of policy, while a few extend as high as 50 percent of the sum assured.
There are a few policies that give a higher proportion of NCB are named as thus, for instance, ‘NCB super plan’ wherein a policyholder is entitled to receive a higher no claims bonus against a higher amount of premium.
Is this a key determinant before buying a plan?
There is no denying the fact that no claims bonus is a vital factor to consider before policyholders opt for a plan. However, experts suggest that one should prioritise a number of factors before comparing the no-claims bonus given by insurers.
“First of all, one should compare the size of the overall sum assured of different insurance plans. After this, policyholders can check the coverage of pre-existing diseases, capping in force with regards to room rent. The policyholder should then compare the amount of premium charged by different insurers. The policyholders who prefer to pay a lower premium can opt for co-pay policies wherein they have to pay a part of the hospital bill, in lieu of a lower premium,” says Abhishek Misra, chief executive officer (CEO) and principal officer, Bonanza Insurance.
“Finally, when all these factors are taken into account, one can compare which insurer is offering a higher ‘no-claims bonus’. One should see whether NCB has an upper capping or not,” he adds.
To sum up, we can say that the no-claims bonus is undoubtedly an important factor that should weigh on the minds of policyholders before they opt for one plan over another. However, the decision of buying a health insurance plan usually hinges on an array of key factors which include the sum assured, size of premium and waiting period, among others.