Decoding No Claim Bonus and Its Effect On Your Healthcare Costs

Health insurance is a crucial safety net that provides financial protection in times of medical emergencies. It not only covers your hospitalisation expenses but also offers additional benefits, including the No Claim Bonus. Understanding what No Claim Bonus in health insurance is and how it works can help you make informed decisions when selecting a health insurance plan.

No Claim Bonus in health insurance is a reward offered to policyholders who do not make any claims during a specific policy year. Essentially, it is a discount or an increase in the sum insured that the policyholder receives for maintaining good health and not utilizing their insurance coverage.

How Does NCB Work in Health Insurance?

The operation of NCB in health insurance is relatively straightforward:

  1. Claim-Free Year: When you do not file any claims in a policy year, you become eligible for an NCB.
  1. Increase in Sum Insured: In most cases, the NCB results in an increase in your sum insured without a corresponding increase in premiums. This means you get more coverage for the same premium amount.
  1. Accumulation: If you continue to have claim-free years, your NCB can accumulate year after year, leading to a substantial increase in your sum insured over time.
  2. Claim Year Reset: In case you do make a claim, your NCB for that year is reset to zero. However, the accumulated NCB from previous years typically remains intact.

How is NCB Calculated?

The estimation of NCB in health insurance is based on v

In health insurance, NCB is not a discount on the premium but rather a benefit that increases your sum insured or provides other advantages for not making any claims during a policy year. NCB in health insurance encourages policyholders to maintain a healthy lifestyle and seek preventive care. The specifics of NCB in health insurance can vary between insurance providers and policies. Here’s a simplified example of how it might work using a table:

Assuming a hypothetical NCB structure for health insurance:

Claim-Free YearNCB BenefitExample NCB Benefit
Year 1No additional sum insured or benefitNone
Year 210% increase in the sum insured or wellness benefitIf your sum insured is Rs. 5,00,000, it increases to Rs. 5,50,000 or you get a wellness benefit worth 10% of the premium.
Year 320% increase in the sum insured or wellness benefitIf your sum insured is Rs. 5,50,000, it increases to Rs. 6,60,000 or you get a wellness benefit worth 20% of the premium.

For instance, if you have a health insurance policy with a sum insured of Rs. 5,00,000 and you haven’t made any claims for two consecutive years, you may receive a 10% increase in the sum insured. Therefore, your sum insured would increase to Rs. 5,50,000 rupees for the next policy year. Alternatively, you might receive a wellness benefit worth 10% of the premium paid during that year.

How To Avail Of the No Claim Bonus?

To earn a No Claim Bonus (NCB) in health insurance, you need to follow certain guidelines and maintain a claim-free record. Here’s how you can get NCB in health insurance:

1. Select the Right Health Insurance Policy: Start by choosing a health insurance policy that offers NCB as a feature. Not all policies provide NCB benefits, so make sure to inquire about this when purchasing your policy.

2. Pay Your Premiums on Time: To maintain your NCB eligibility, it’s crucial to pay your health insurance premiums promptly. Any lapse in premium payment can affect your NCB status.

3. Stay Healthy and Prevent Illness: While this may not be entirely within your control, adopting a healthy lifestyle and preventive measures can reduce the likelihood of health issues. Regular exercise, a balanced diet, and avoiding risky behaviours can help keep you in good health.

4. Regular Health Check-Ups: Schedule regular health check-ups to detect and address potential health issues early. Preventive healthcare can help you stay claim-free.

5. Comply with Policy Terms: Familiarise yourself with the terms and conditions of your health insurance policy. Ensure that you comply with all the requirements, such as pre-authorization for certain medical procedures or following network hospital guidelines.

6. Avoid Unnecessary Claims: While health insurance is there to provide financial protection during medical emergencies, it’s essential not to make unnecessary claims for minor ailments or routine check-ups. Small claims can be paid out of pocket to maintain your claim-free status.

7. Keep Records: Maintain records of all your medical bills and receipts, even if you choose not to make a claim. This documentation can be valuable if you ever need to prove your claim-free status.

8. Renew Your Policy Timely: Continuously renew your health insurance policy without any breaks. NCB benefits typically accumulate over consecutive years of claim-free coverage.

Remember that NCB in health insurance varies from one policy to another, and the terms and conditions may differ between insurance providers. It’s essential to read and understand the specific NCB guidelines outlined in your policy document and communicate with your insurance provider if you have any questions or concerns regarding your NCB status.

By maintaining a claim-free record, adhering to the terms of your policy, and staying proactive about your health, you can gradually accumulate NCB benefits that enhance your coverage and provide financial security during medical emergencies.

The Bottom Line

NCB is a valuable feature in health insurance that rewards policyholders for staying healthy and not making claims. It provides financial incentives, encourages a healthier lifestyle, and offers enhanced coverage over time. When selecting a health insurance plan, consider the NCB benefits and how they align with your health and financial goals. Ultimately, NCB can be a win-win situation, where you enjoy improved health and financial security simultaneously.


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Amit Arora

I am a seasoned retail banker with over 21 years of global experience across business, risk and digital. In my last assignment as Global Head Digital Capabilities, I drove the largest change initiative in the bank to deliver the end-to-end digital program with over US$1 billion in planned investment. Prior to that, as COO for Group Retail Products & Digital, I implemented a risk management framework for retail banking across the group.
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