No Claim Bonus in Health Insurance Explained

Posted on: Dec 15, 2025 | 3 mins | Written by: HDFC ERGO Team

No Claim Bonus in Health Insurance Explained

What is no claim bonus in health insurance

With medical costs increasing, having a health insurance policy has become essential to safeguard your finances against unexpected healthcare expenses. While these policies primarily protect you during medical emergencies, insurers also encourage healthy living and policy continuity by offering certain rewards. One such reward is the NCB, which is offered at the time of policy renewal if you do not make any claims during the policy year. Read on to understand further what is no claim bonus in health insurance and how it works.

What is No Claim Bonus (NCB)?

When you buy health insurance, you may find a feature called the NCB mentioned in the policy document. NCB is a renewal benefit offered by insurers if you do not make any claims during the policy year.

For every claim-free year, insurers reward you with an NCB, which is usually provided as an increase in the sum insured at no additional cost or as a discount on the renewal premium, depending on the policy. This benefit encourages policyholders to maintain their health and avoid filing unnecessary claims.

Different Types of No Claim Bonus

Here are the two most common types of NCB in health insurance:

1. Cumulative Bonus

Under a cumulative bonus, the sum insured (coverage amount) increases by a fixed percentage for every claim-free policy year, while the premium remains unchanged.

Example:

Mr A buys a health insurance policy with a sum insured of ₹10 lakh in Year 1 and makes no claims. At renewal for Year 2, he receives a 5% cumulative bonus, increasing his coverage to ₹10.5 lakh at the same premium.

2. Discount on Premium

In this type, insurers offer a discount on the renewal premium for a claim-free year, while the sum insured remains the same.

Example:

Mr A has a ₹10 lakh policy and pays an annual premium of ₹50,000 in Year 1. Since he makes no claims, he gets a 10% discount at renewal, reducing his premium to ₹45,000 in Year 2, with no change in coverage.

These types of NCB reward policyholders either by increasing coverage or reducing premium costs.

How No Claim Bonus Works in Health Insurance

Regardless of the type of NCB offered, you can either use it at the very next policy renewal or accumulate it over multiple claim-free years to enjoy higher benefits. However, insurers specify a maximum limit beyond which NCB cannot be accumulated.

It is important to read your policy document carefully to understand this limit. For instance, if your policy offers a 10% NCB for every claim-free year, subject to a maximum of 50%, you can accumulate the benefit for up to five consecutive claim-free years. Once this limit is reached, no further NCB is added.

Features of No Claim Bonus

Some key features of NCB include:

• NCB may be offered as an increase in the sum insured or as a discount on the renewal premium. These benefits can be used immediately or accumulated, subject to the insurer’s maximum NCB limit.

• If you file a claim during the policy year, the accumulated NCB usually resets to zero. This applies even if a claim is made for a single member under a family floater policy.

• Both individual health insurance plans and family floater plans are generally eligible for NCB benefits.

Benefits of No Claim Bonus

NCB offers several advantages to policyholders:

• With a cumulative bonus, you enjoy higher coverage at the same premium, while a premium discount helps reduce the cost of policy renewal without affecting coverage.

• NCB benefits are portable and can be carried forward when switching insurers at the time of renewal, subject to policy terms.

• The promise of NCB encourages policyholders to maintain good health and avoid filing unnecessary claims, leading to long-term savings and enhanced coverage.

Add-on Covers Linked to No Claim Bonus

Some insurers offer an NCB protect add-on that helps safeguard your No Claim Bonus even if you file a claim during the policy year. When this add-on is opted for, your accumulated NCB does not reduce or reset to zero after a claim and remains intact. Availability and conditions may vary across insurers, so it is advisable to check the policy terms before opting in. Keep in mind that choosing this add-on requires paying an additional premium.

Cumulative Bonus vs. No-Claim Bonus

NCB is a renewal benefit awarded for a claim-free year and may be offered as either an increased sum insured or a discounted renewal premium. On the other hand, a cumulative bonus refers only to an increase in the coverage amount after a claim-free policy year, without any reduction in premium.

Is NCB Available for All Health Plans

NCB may not be available on all health insurance plans. Whether a policy offers NCB and, if so, in what form, depends on the insurer and the specific plan. Since NCB terms can vary, it is important to carefully review the policy document to confirm the availability, limits, and conditions of No Claim Bonus benefits before purchasing or renewing a plan.

Conclusion

A health insurance policy offers value far beyond covering medical expenses alone. One such valuable feature is the no claim bonus in health insurance, which rewards you at the time of policy renewal for remaining claim-free during the previous policy year. NCB benefits are typically provided as higher coverage at no extra cost or reduced premium rates, helping you save money or enhance protection over time. However, not all policies include this benefit. Hence, it is essential to carefully review your policy documents to confirm its availability and understand the maximum NCB limit set by the insurer so that you can make the most of this reward.

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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