Q. In 2022, a friend convinced me to purchase health insurance. I purchased a policy without knowing anything. It has a cover of ₹5 lakhs. So far, I have paid two premiums ₹12,000 each. If I file no claim, will I get the premiums back after 3 years?
Health insurance is a way of protecting yourself financially in case of an unexpected illness or injury. When you purchase a health insurance policy, it's important to understand the terms and conditions of the policy, including the coverage and exclusions.
In general, health insurance policies do not return the premium paid, if there is no claim made during the policy term. The premiums are used to cover the cost of claims made by policyholders, and they are not refundable.
However, instead of the concept of return of premiums, most of the health insurance policies these days offer a feature known as a bonus or no-claim bonus (NCB). This is known by various names like loyalty benefit, multiplier benefit, etc.
Such bonuses are a way insurance companies incentivize policyholders to be proactive about their health so that there is no need to make claims. By offering an increased coverage amount for the same premium in the following year, policyholders are encouraged to take responsibility for their own health expenses and to use preventive healthcare measures. Thus, this reward system ultimately benefits both the policyholder and the insurance company.
Two types of such bonuses are most common.
No-claim bonus (NCB)
This is a cumulative bonus that increases each year when you don't make a claim. For instance, you may find policies offering 5%, 10%, or even 25% NCB annually, reaching a maximum of 100%.
For example, if you have a base coverage of ₹10 lakhs and the NCB is 10%, you will have ₹1 lakh added to your policy each year until you reach a maximum of 100% ( ₹10 lakhs in bonus). But if you file a claim in a year, the bonus will decrease by the same percentage (10%) in the next policy year.
Guaranteed bonus
This is an annual fixed bonus. A set percentage of the bonus is given each year regardless of whether you made a claim or not.
Please check with your insurance company about the terms of their policy. Before you make a purchase, you must evaluate these terms, coverage, and exclusions to make sure the policy meets your needs.
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