Understand Cumulative Bonus in Your Health Insurance Policy

Do you understand the concept of cumulative bonus in your health insurance plan? Investing in a health insurance plan will keep yourself and your family financially safeguarded in the future. It will save you in terms of hospitalization, and medical treatments alike. Suppose you do not raise your claim during the tenure of the policy. In this case, the investment will not go to waste at all; health insurance companies provide a cumulative bonus in insurance which you will get in such cases.

What is Cumulative Bonus in Health Insurance?

The no-claim bonus or cumulative bonus is a benefit given by insurance companies to customers for not raising claims in a policy year. Regular benefits include discounts on the premium payments for policies or a higher sum insured amount. Both of these aspects come with upper limits of course. 

The cumulative bonus Mediclaim policy is a major incentive provided by health insurance companies to their customers after completing any claim-free tenure. The regular incentive is usually an increment of the sum assured from 5-50% of the total amount of the sum insured. The increment concludes after it completely matches the overall initial sum assured amount. 

What takes place if you raise a claim after getting one claim bonus or multiple such bonuses? If you raise this claim after getting one or several claim bonuses, then you will miss out on the increment garnered in the earlier tenure’s claim bonus. The loss will take place at a similar rate as the increment in question. Hence, if this increment stands at 10% of the sum insured, you will end up losing on the bonus that has been accumulated at a similar rate. 

An Instance of Cumulative Bonus In Health Insurance

Suppose Rajesh buys a health insurance plan with a sum insured amount of Rs. 5 lakh. His cumulative bonus was 50% for the amount after completing every year that is free of a claim. Hence, after the first cycle in which Rajesh did not raise any claim, then he was eligible for a sum insured increase of Rs. 2.5 lakh. Hence, in the upcoming cycle, he will now get a sum insured amount of Rs. 7.5 lakh. Now that another cycle of the policy has been finished, he will get a similar Rs. 2.5 lakh increment. This will lead to the sum insured amount becoming Rs. 10 lakh. Now that the increment he gets, i.e., Rs. 5 lakh is similar to the initial sum insured amount, then he will not have eligibility for the upcoming increase. If he makes his claim, then he will lose the increment garnered in the earlier/upcoming cycle. 

Points Worth Noting About Health Insurance Cumulative Bonus

• A cumulative bonus may have the coverage amount going up for every year that is claim-free with the same amount as the premium. The second option is a discount in the premium amount for every claim-free year. 
• The coverage increase is subject to a limit. This is usually 50-100%. There are many terms and conditions that you should check in this regard. 
• The cumulative bonus is available as an individual benefit and also floater cumulative bonus benefit. Hence, irrespective of whether you have an individual health insurance plan or a family floater plan with one sum assured, you will have eligibility for this benefit. 
• Every health insurer does not offer cumulative bonus benefits. There will always be some terms and conditions to keep in mind for getting such a benefit. You should read your policy documents carefully in this regard. 
• The bonus is usually accumulated till 10 years. 
• Policyholders should renew their policies in a timely manner. 
• The cumulative bonus may be fully withdrawn or after there is a premium deduction. 

Benefits of Cumulative Bonus in Health Insurance 

• You will get this reward/benefit from the health insurance company after a claim-free tenure is completed. 
• The reward is either an increase in the sum assured amount or a discount in the premium for the policy. 
• You may avoid paying a sizable premium for additional coverage and save a lot of money in the bargain. 
• You can pay a lower amount for similar coverage. 
• You can also accumulate your cumulative bonus amount till 10 years. 
• You can also cover smaller medical costs and use this benefit likewise. 
• This bonus also spurs people to stay healthy and avoid claims or hospitalization. 

Knowing More About the Mediclaim Cumulative Bonus

• A Mediclaim policy indicates an insurance policy offering financial security against medical emergencies and hospitalization. 
• These plans offer coverage for sudden ailments, accidents and surgeries. 
• Mediclaim policies have lower coverage as compared to regular health insurance policies. 
• Yet, both types of policies have similar cumulative bonuses. 
• NCB (no claim bonus) has a difference with cumulative bonus. The former indicates the discount provided by insurance companies after completing a claim-free policy period. Yet, it only indicates the discount offered on the premium payable for the policy. However, cumulative bonus not only encompasses such a discount but also an increase in the sum insured amount instead. 
• The cumulative bonus is not impacted by periodic health check-ups. 

The Conclusion

You should know that the cumulative bonus will come handy on a rainy day or even help you get a higher sum insured amount. The latter scenario will naturally help you keep pace with rising inflation and skyrocketing costs of medical treatment. If you get premium discounts, then it may also help you save costs in the long run.