In today’s fast-paced world, maintaining our health can often feel like a secondary concern amidst the demands of work, family, and daily responsibilities. Thus, giving way to potential health issues such as diabetes, heart disease, etc. But what if your health insurance could reward you for staying healthy? You wouldn’t say no, right? This is where Cumulative Bonus comes in!
Imagine getting a bonus simply for not making a health insurance claim in a year. This is possible with a Cumulative Bonus.
Let’s quickly discuss how the cumulative bonus in health insurance works.
What Is A Cumulative Bonus?
Cumulative Bonus is a reward that insurers offer their customers for not making any claims during the policy term. This bonus usually comes in two forms: either a discount on your next policy premium or an increase in your sum insured for the following term. It’s important to note that both options typically have an upper limit set by the insurer.
How Does The No Claim Bonus Work?
As mentioned before, there are two main ways insurers can reward you with a No Claim Bonus (NCB) –
- By Increasing The Sum Insured:
Most insurers will increase your sum insured by a certain percentage each year as a bonus, without raising your premiums. For example, depending on your policy, the NCB might be 10% or 20% per year. If you go a year without making a claim, your sum insured increases to 110%. Another claim-free year bumps it up to 120%, and so on.
There’s usually a cap on how much bonus you can accumulate. For instance, some insurers allow an NCB of up to 100% of the sum insured. This means that even though you accrue a bonus every year you don’t claim, the maximum sum insured you can reach is double your original sum insured.
Example: Ms. Anjali buys a health insurance policy with a sum insured of Rs. 10 lakhs. Her insurer offers a cumulative bonus of 20% of the insured amount for each claim-free year.
Here’s how the sum insured will increase in her case –
| Year | Initial Sum Insured (Rs.) | Cumulative Bonus (20%) (Rs.) | New Sum Insured (Rs.) | Total Bonus Accumulated (Rs.) |
| 1 | 10,00,000 | 2,00,000 | 12,00,000 | 2,00,000 |
| 2 | 12,00,000 | 2,00,000 | 14,00,000 | 4,00,000 |
| 3 | 14,00,000 | 2,00,000 | 16,00,000 | 6,00,000 |
| 4 | 16,00,000 | 2,00,000 | 18,00,000 | 8,00,000 |
| 5 | 18,00,000 | 2,00,000 | 20,00,000 | 10,00,000 |
Note:
- After the 5th year, Ms. Anjali’s sum insured will not increase further as the cumulative bonus has reached the cap (equal to the initial sum insured of Rs. 10 lakhs).
- If she makes a claim, the bonus amount from the previous cycle will be deducted from the sum insured in the next term.
- By Decreasing Your Premium Amount:
When you buy a health insurance policy, the insurer estimates your risk and sets your premium rates accordingly. Each year you go without making a claim, they might reward you by discounting your premium for the next year. This means you’ll pay less for the same coverage. However, your policy’s sum insured will stay the same, even though your premium costs go down.
What Are The Benefits Of Cumulative Bonus?
- Enhanced Coverage
One of the primary benefits of a cumulative bonus is the gradual increase in your sum assured over time. For each year that you don’t make a claim, your coverage amount grows, offering you higher financial protection against medical expenses. This increased coverage is particularly valuable as healthcare costs continue to rise. Remember, claims are still subject to the terms and conditions of your health insurance policy.
- Financial Savings
In some instances, the cumulative bonus is provided as a reduction in the premium for the next policy year. This means that you not only receive increased coverage, but you also enjoy savings on your health insurance premiums. It’s a rewarding system that incentivizes policyholders to maintain a healthy lifestyle and reduce medical expenses.
- Motivation for Healthy Living
The cumulative bonus serves as a strong incentive for policyholders to take better care of their health and adopt preventive measures. By staying healthy and avoiding claims, you not only save on premiums but also enjoy the benefits of increased coverage. This creates a positive cycle where maintaining good health leads to financial rewards.
- Long-term Benefits
The cumulative bonus feature fosters a long-term relationship between you and your insurance provider. By rewarding you for not making claims, insurance companies encourage loyalty and ensure that you remain invested in your policy for the long haul. This long-term association can lead to better service and additional benefits over time.
Summing up!
A cumulative bonus in your health insurance is a valuable benefit that encourages you to lead a healthier lifestyle and avoid making unnecessary claims. Thus, protecting your finances. We always recommend that you carefully review the policy details and understand the type of NCB offered under your chosen plan. This way, you can make an informed decision and choose the best health insurance policy for your needs.
