No Claim Bonus (NCB) in Health Insurance: How It Works and Its Benefits
Mini Balakrishnan
In India, health insurance isn’t just about covering medical expenses; it’s also about rewarding healthy living. One such reward is the No Claim Bonus (NCB), offered to policyholders who don’t make claims during the policy period. Let’s break down how NCB works, its benefits, and what you should keep in mind to maximize its value.
What is No Claim Bonus (NCB) in Health Insurance?
The No Claim Bonus is a reward given by insurers to encourage policyholders to maintain their health and avoid claims. This bonus increases your sum insured without any additional premium or can even lead to premium discounts, depending on your insurance provider.
How Does NCB Work in Health Insurance in India?
NCB is typically offered as a percentage increase in the sum insured for every claim-free year. This increase can range between 10% and 50%, capped at a certain percentage, often 50%.
For example:
- Year 1: Sum insured = Rs. 5 lakhs
- After 1 claim-free year: NCB of 10%, sum insured becomes Rs. 5.5 lakhs
- After 2 claim-free years: NCB increases to 20%, sum insured becomes Rs. 6 lakhs
Note:
It is not applicable to pre-existing conditions or claims related to such illnesses.
NCB applies mainly to individual health policies, not to family floater policies.
Benefits of No Claim Bonus (NCB) in Health Insurance
1. Increased Coverage at No Extra Cost
With each claim-free year, your sum insured grows without you having to pay more for it, giving you more financial security in case of medical emergencies.
2. Lower Premiums
In some cases, NCB can lead to premium discounts, reducing the amount you pay for the same level of coverage during policy renewal.
3. Motivation for a Healthy Lifestyle
NCB encourages you to stay healthy, prioritize preventive care, and avoid making claims, leading to better health outcomes in the long run.
4. Enhanced Trust and Loyalty
Being rewarded with NCB over time increases your satisfaction and trust in the insurance company, strengthening customer loyalty.
Limitations of NCB in Health Insurance
While NCB has several advantages, there are some limitations to keep in mind:
- Non-transferability: NCB is not transferable between insurers, so switching insurance providers can cause you to lose your accumulated NCB.
- Limited to Individual Policies: NCB is generally applicable only to individual policies, not family floater plans.
- Not for Pre-Existing Conditions: If you make a claim related to a pre-existing illness, your NCB won’t be applicable.
How to Maximize the Benefits of NCB
Choose Policies with Higher NCB Cap: Some policies may offer a higher cap on NCB, allowing you to enjoy larger increases in your sum insured.
Stick to Preventive Care: Regular check-ups and preventive healthcare can help you avoid claims and enjoy more years of NCB accumulation.
Renew Timely: Ensure timely renewals to avoid losing out on your NCB benefits due to policy lapse.
Conclusion: Is NCB Worth It?
The No Claim Bonus in health insurance can be an effective way to reduce premiums and increase your coverage, offering long-term benefits for policyholders who maintain a healthy lifestyle. While NCB has its limitations, such as non-transferability and its inapplicability to family floater policies, it’s a feature worth considering when choosing a health insurance plan.
Make sure to weigh your healthcare needs and compare policies to ensure you’re making the most of this rewarding feature.
