Health insurance is an important investment to protect yourself and your family against unexpected medical expenses. But, have you ever wondered if there’s a way to make your health insurance even more beneficial?
The answer is yes!
No claim bonus (NCB) is a reward given by health insurance companies to policyholders who don’t make any claims during their policy tenure. It helps reduce the overall cost of the health insurance policy while also providing additional coverage. NCB is an excellent way of incentivizing policyholders to stay healthy and practice preventive healthcare measures.
In this article, we explore what no-claim bonus is, how it works, its eligibility criteria and the various benefits of availing of it.
What is no claim bonus?
No claim bonus (NCB) is a reward given by health insurance companies to policyholders who don't make any claims during the policy tenure. It is a way of incentivizing customers for leading a healthy lifestyle and taking preventive healthcare seriously. NCB is also known as no-claim discount or bonus, which can be availed in the form of discounts on premiums on renewal of the health insurance policy.
Health insurance companies offer NCB to encourage customers to stay healthy and take preventive healthcare measures. This helps insurance companies reduce their payouts due to fewer health insurance claims. The policyholder benefits from this reward as it reduces the overall cost of the health insurance policy.
How does no-claim bonus work?
NCB works on the basis of a ‘claim-free year’. For every claim-free year, the insurance company offers a certain percentage of NCB which gets accumulated with each successive claim-free year. Generally, the NCB percentage increases with each claim-free year. This means that the longer you go without making a claim, the higher your NCB will be.
The NCB percentage is usually between 10% to 50%. This percentage is applied to the base premium and the total savings are given as a discount on the renewal of the health insurance policy.
What is the eligibility criteria for no claim bonus?
The eligibility criteria for a no-claim bonus in health insurance vary from insurer to insurer. The major requirement is that you must have had no claim made against your health insurance policy during the specified period of time. In some cases, the policyholder must also provide proof of good health and submit a medical examination report at the time of renewal.
It is important to note that the no-claim bonus is only applicable to the base sum insured and not any additional top-ups or riders. If the policyholder makes a claim against the base sum insured during the stipulated time frame, then they will not be eligible for the no-claim bonus.
Furthermore, the policyholder must renew their policy before the expiry date in order to be eligible for the no-claim bonus. If the policy is not renewed on time, then the policyholder will have to start afresh and will not be eligible for any accumulated bonuses.
What are the benefits of no claim bonus?
Reduced Premiums: The most obvious benefit of NCB is that it reduces the premiums on renewal of the policy. This helps policyholders save money as they can get discounts on their health insurance premiums.
Longer Policy Tenure: NCB also allows policyholders to enjoy the benefits of their health insurance policies for longer periods of time. The longer the policy tenure, the greater the protection it provides to the policyholder.
Higher Sum Insured: As NCB increases with each claim free year, the policyholder can opt for a higher sum insured on renewal of the policy. This will provide additional coverage and financial protection to the policyholder.
Tax Benefits: NCB can be availed as a deduction from the taxable income. This tax saving benefit further reduces the overall cost of the health insurance policy.
Enhanced Coverage: NCB also enables policyholders to enhance their coverage by opting for additional riders or add-on covers such as critical illness cover, maternity cover, etc.
No claim bonus is an excellent way of incentivizing policyholders to stay healthy and practice preventive healthcare measures. It is a reward given by health insurance companies to policyholders who don’t make any claims during their policy tenure. Therefore, it is important for policyholders to understand the importance of NCB and avail its benefits.