How Does a No-Claim Bonus Work in Health Insurance?

Posted on: Jun 6, 2025 | 3 mins | Written by: HDFC ERGO Team

How Does a No-Claim Bonus Work in Health Insurance?

In simple terms, a No-Claim Bonus (NCB) is a reward given to you by your insurance provider for not making any claims during a policy year. It acts as an incentive for staying healthy and using your insurance judiciously.

In most cases, this bonus comes in the form of:

• An increase in the sum insured without a corresponding rise in your premium

• A discount on your renewal premium.

How Does No-Claim Bonus Work?

When you purchase a health insurance policy, it typically covers a fixed sum insured amount. If you don’t make a claim in a policy year, your insurer may reward you by increasing the sum insured by a certain percentage (usually up to 50%), up to a predefined limit. This increase does not come with an extra premium.

For example:

• Let’s say your sum insured is ₹5 lakh.

• You don’t raise any claim during the policy year.

• The insurer offers a 10% NCB.

• In the next year, your sum insured becomes ₹5.5 lakh at no additional cost.

This accumulation continues until you reach the maximum allowed bonus limit.

Types of No-Claim Bonuses

1. Cumulative Bonus:

◦ Most common form of NCB.

◦ Your sum insured increases by a fixed percentage for each claim-free year.

2. Discount on Premium:

◦ Some insurers may offer a renewal premium discount instead of increasing the sum insured.

Conditions for Availing a No-Claim Bonus

It is essential to understand the conditions linked with NCB:

• Only valid if no claim is made: Even a small claim can make you ineligible.

• Applicable to individual and family floater plans: Each has specific terms.

• May have a cap: There’s often a maximum limit (like 50% of the base sum insured).

• Not permanent: If you make a claim in the future, your accumulated bonus may reduce or reset.

Benefits of a No-Claim Bonus

NCB offers numerous advantages that can add value to your policy:

• Higher coverage at no extra cost: More coverage for the same premium.

• Incentive for healthy living: Encourages preventive healthcare.

• Long-term savings: Helps reduce renewal costs or increase benefits.

• Financial cushion: The bonus can help during high medical expenses in future years.

Factors to Consider

Before relying heavily on your NCB, consider the following:

• Cap on sum insured:

Understand the maximum limit up to which your sum can increase.

• Policy porting:

When switching insurers, check if your bonus can be carried over.

• Claim resets:

A claim could reset your NCB to zero in some cases.

• Plan terms:

Different insurers have different rules. Read the policy document carefully.

Can You Lose Your No-Claim Bonus?

Yes, you can. If you raise any claim during the policy year, your NCB may:

• Get completely reset

• Be partially reduced

Also, if you forget to renew your policy on time, your accumulated NCB may lapse.

Is NCB Available in Family Floater Plans?

Yes. In a family floater plan, the No-Claim Bonus is applicable at the policy level, not per member. So, if all members stay healthy and there are no claims, the NCB increases the total sum insured of the policy. However, a single claim by any member can affect the NCB for the entire plan.

Things to Keep in Mind When Porting

If you’re planning to switch to another insurer, make sure to:

• Inform the new insurer about your existing NCB.

• Provide past policy documents as proof.

• Confirm if the new insurer accepts the transferred bonus.

Many reputed insurers allow you to carry forward your NCB during porting. But always verify the terms before you proceed.

Conclusion

If you are wondering what is health insurance offering beyond just hospital cover, NCB is one key feature to explore. A No-Claim Bonus not only rewards you for maintaining good health but also helps you get more value from your insurance policy. It is a small feature with big long-term benefits.

Understanding how a No-Claim Bonus works can help you plan your medical cover smartly, avoid unnecessary claims, and stay protected always.

Disclaimer: The above information is for illustrative purposes only. For more details, please refer to the policy wordings and prospectus before concluding the sales.

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