What is NCB (No Claim Bonus) In Health Insurance?

8 min read Posted on 30 Aug 2024

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Many insurance providers have attractive features added to their insurance plans like "No Claim Bonus". No Claim Bonus is a health insurance bonus awarded to an insurance holder for every year the insurance is not claimed. It continues even when the insurance plan is renewed.

Most insurance companies provide a no-claim bonus of 5% or higher on the sum assured. Companies that do not provide any no-claim bonus often rebate on the premium or cumulative benefits.

It is important to know about health insurance and no claim bonuses when signing for insurance.

What is a No Claim Bonus?

An NCB is a way of rewarding the insurance holder to stay healthy and make claims on their policies. The most common form of health insurance bonus is cumulative benefits.

In cumulative benefits, a certain percentage is added to the sum insured every year the insurance is not claimed. There is a limit on the bonus on the no claim in health insurance of up to 50% on cumulative NCB.

Types of No Claim Insurance

There are two types of bonuses on No Claim in health insurance. They are:

A discount on the premium amount on the policy.
Cumulative benefits in the form of a high sum insured.

Policy Features, Riders & Add-ons

How does NCB work?

It is doubtful that most insurance holders will ever put in a claim. To understand how no claim bonus health insurance works, we will take the help of an example.

For Example; A person has a health insurance policy of Rs.3 lakh. The insurer has 5% cumulative benefits with a max of 50%. The total sum insured at the end of every year not claimed is:

Sum insured after 1 claim free year: Rs.3,15,000/-
Sum insured after 2 claim-free years: Rs.3,30,000/-
Sum insured after 3 claim-free years: Rs.3,45,000/-

Features of No Claim Bonus in Health Insurance:

Insurance holders will not lose out on the no-claim bonus health insurance if a low-value claim is filed.
Upon renewal of the policy, the NCB will often serve as a discount on the premium payable provided the policy is renewed within 30 days.
No claim bonus can also be transferred at the time of renewal.
The NCB is disbursed in the same way as it was provided or as part of the insured sum after the premium has been deducted.
For family insurance policies, the NCB benefits extend to all the family members.
If an insurance policy expires and is not renewed within the time limit, the benefits of the NCB also expire.
Many insurance providers also have add-on covers to provide more NCB. Typically, NCBs have a limit, but the cover can be extended to up to 50% in a year. For add-on covers, the maximum limit will be 100% of the sum insured.

For people who are planning to apply for health insurance and wondering what to know about health insurance, knowledge of NCB is advantageous. It will make the policyholder more aware and more conscious. More the knowledge, the better will improve the decision-making with the health insurance policies.