Know about no claim or cumulative bonus in health insurance plans

Published on : 08:15 AM Mar 25, 2022

Medical expenses are increasing day by day. Hence, it has become mandatory for everyone to take a health insurance policy and it is an important aspect of financial planning. The health insurance policy offers benefits such as medical treatment costs when claimed and benefits such as a cumulative bonus when not claimed.

Hyderabad: Insurers try to provide certain benefits to their policyholders when they do not make any claim during the policy year. This is one of the cumulative bonuses. This applies to both personal and family floater policies. In a way, the insurance company increasing the value of your policy can be considered as a bonus. Apart from that, no additional premium will be charged for this.

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For example, suppose you take a policy worth Rs 10 lakh and your insurance company gives you a 5% bonus for the year you do not claim. Then the value of your policy will be Rs 10,50,000. If there is no claim for the second year, the value of the policy will reach Rs 11 lakh. There is no consistent slab policy to increase policy value. Moreover, it varies, depending on the insurance companies. Currently, some insurance companies offer up to 150-200% of the value of the insurance policy as a bonus.

Cumulative bonus in health insurance: Another interesting thing about the cumulative bonus is that if you claim during the policy year, the total bonus will not be deducted. The bonus is reduced in the proportion provided. For example, suppose your insurance company offers a 10% bonus for a year that is not claimed. You have not made any claim for five years in a row. Then the value of your policy will increase by 50%. The total value of your policy will be reduced by 10% on the sixth year of claim. If you have taken a policy of Rs 10 lakh and if you do not claim for five years then the policy will be Rs 15,00,000. Even if you claim now, the insurance company will reduce the amount by 10 per cent. That is, your policy value will be Rs 14,00,000. Advertisement

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Not applicable to all policies: Not all health insurance policies have a cumulative bonus. Also, depending on the insurance company, the bonus rate varies. Learn the rules regarding bonuses. It is important to know how much the maximum bonus will be. Some insurance companies offer the highest percentage bonus in the early days of the policy. It can be up to 50 per cent. After that, they reduce it and limit it to 5-10 per cent.

A cumulative bonus is a way to increase the policy without any additional burden on the premium. Although this bonus is good, do not forget that it has some limitations. It is not advisable to rely entirely on this. Even the current large amount of health insurance policy may not be enough for years, given that medical inflation is rising by 12-15 per cent a year. Failure to claim will result in a bonus. But, it is natural to get sick as we age. From time to time, we should try to increase the basic policy amount based on our needs and health conditions. Therefore, the policy is further strengthened with a bonus.

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Read: Why should you buy health insurance at an early age?

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