Cumulative Bonus in Health Insurance

8 min readPosted on 02 July 2024

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Ever since the pandemic, we have understood health is the most important aspect of life. So buying a comprehensive health insurance plan is a necessity. Health insurance provides financial help by covering your medical, hospitalisation, consultation, and ambulance fees. Purchasing health coverage has become essential in today's society.

If a claim is not made throughout the policy term, it's not a waste! Customers who maintain good health are given a special incentive by health insurance. The phrase "Cumulative Bonus" (CB) is mentioned. Kindly go through the post to learn more about cumulative bonuses in health insurance!

What is a Cumulative Bonus in Health Insurance?

In the context of health insurance, a cumulative bonus is a financial benefit you receive for one policy year of no claims. The idea of a no-claim bonus in car insurance is similar to this. However, the benefits you receive vary depending on the health insurance. Some insurers will reduce your premium for the following year, while others may add an amount covered to your health insurance without increasing your price.

Let us make you understand with an example:

Suppose you purchased a health insurance plan with a 5 lakh sum insured and did not file any claims in the first year. In that case, he will receive a cumulative bonus of 10% at the renewal, bringing the total amount insured for the next year down to INR 5 50,000 instead of 5 lakhs.

Similar to the first year, if you do not file a claim again in the second year, you will receive a bonus of 20%, increasing the money covered by another INR 20,000 to INR 6,00,000.

Note: This was only an illustration to demonstrate how health insurance would function if you increased your sum insured in conjunction with a Cumulative Bonus. Every insurance plan will provide varying rates for premium discounts or increases in the amount insured.

Policy Features, Riders & Add-ons

What is the Role of Cumulative Bonus in Health Insurance?

After a claim-free period has ended, health insurers reward their clients with a cumulative bonus. An increase in the amount covered of up to 5 to 50% of the total insured amount is the typical incentive provided by health insurance. After reaching the total amount of the beginning sum covered, the increment stops.

What happens afterwards if you submit a claim after being awarded one or more claim bonuses? In that case, you will forfeit the increment from the claim bonus from the last term if you file a claim after receiving one or more claim bonuses. Losses will occur at the same rate as increases. In other words, if the increase is 10% of the insured amount, you will lose your bonus at the same rate.

Benefits of Cumulative Bonus

You can save money by receiving extra coverage at the same price during renewal.
Your premium will be discounted, or additional money will be included in your covered total.
You can keep accruing your cumulative bonus for 10 years under some programmes.
If your medical costs are less, you may decide to take care of them on your own and maximise the cumulative incentive.

Difference Between Cumulative Bonus and No-Claim Bonus

The phrase "No Claim Bonus" or "NCB" may have come up when discussing car or two-wheeler insurance. It refers to a discount provided by insurers after the insured has had a claim-free period. However, the terms No Claim Bonus and Cumulative Bonus are interchangeable when referring to health insurance. In contrast, it can entail a lower policy premium or a higher sum insured in the context of health insurance. The cumulative bonus in health insurance is subject to vary.

The cumulative bonus is only earned during claim-free years, which means that as you become older and get closer to retirement, you may not have as many claim-free years as you had when you were younger.

Policy Features, Riders & Add-ons

Conclusion

One other thing to remember is that if you raise your sum insured, you will still be eligible for a cumulative bonus for the claim-free years on the higher sum insured. Make sure you don't neglect the cumulative bonus notion now that you know it. We will advise you to take advantage of the cumulative bonus during years without a claim, periodically assess the sufficiency of your sum covered, and continuously strengthen your financial security.