What To Do If Your Health Insurer Is Withdrawing No-Claim Bonus

By Saroni Chakravarti | May 14, 2018

A number of public-sector insurers are withdrawing no-claim bonus and other benefits on their insurance plans. Let’s find out what recourse you have in such a situation.

What To Do If Your Health Insurer Is Withdrawing No-Claim Bonus

Several insurers in India offer a no-claim bonus as a benefit for not availing the claim amount. Most of these insurance providers offer a no-claim bonus to the insured during the policy term. Some insurance companies even offer an increase in sum assured, in the form of a cumulative bonus. Companies that do not offer a no-claim bonus often provide a rebate on the renewal premium in order to stand at par with their competitors.

However, a number of public-sector insurers have been withdrawing no-claim bonus and other benefits on their insurance plans lately. Let’s find out what recourse you have in such a situation.

Don’t have a Health Insurance policy yet? Find out more here.

What is a no-claim bonus?

The no-claim bonus offered on a Health Insurance policy is in the form of a cumulative bonus. Insurers offer this on indemnity-based Health Insurance policies. The policyholder must meet the following conditions:

  1. There is a progressive increase in the sum assured, by a value of at least 5%. This is the cumulative bonus accrued during one policy year in which no claim has been made by the insured. The cumulative bonus can be accumulated for a maximum period of 10 years.
  2. The cumulative bonus that a policyholder is eligible to receive on his/her Health Insurance will be stated in the policy document.
  3. Insurers apply the cumulative bonus to the sum assured for a 3-year period. This can help to renew the policy by the due date as well.
  4. The cumulative bonus will expire if the person does not renew the Health Insurance policy by the due date.
  5. Each year the sum insured increase varies from 10%-50%.
  6. If one makes claims during overlapping periods of two Health Insurance policies, one will receive the benefit of the available sum insured. The cumulative bonus will also not reduce to zero.

Lately, some of the public-run health insurers have been withdrawing this benefit and raising the possibility of consumers switching to a private sector insurer.

Additional reading: Must-Know Health Insurance Rules

Experts advise that people who are above 50 years of age, should consider switching to a health policy with no-claim bonus benefit. Although this will result in only a marginal increase in premium costs, the benefit is useful.

For others, however, it may not make much sense to switch to a private insurer only to avail this benefit as this will serve no purpose if the new insurer also withdraws this claim in some time.

Low-value claim:

When the policyholder files a low-value claim, he/she does not lose the entire No Claim Bonus. The insurer only deducts a small percentage from it.

Additional reading: Little-Known Features of Health Insurance Plans

Renewal of Health Insurance policy:

The no-claim bonus will also act as a discount on premium payable for the Health Insurance policy at the time of renewal. Generally, in order to avail this benefit, one has to renew the policy within 30 days of the due date for renewal.

Transferability of the no-claim bonus:

One can transfer the no-claim bonus that one enjoys from a particular Health Insurance policy to a new Health Insurance policy from another insurance provider. One can avail this at the time of renewing the policy.

Additional reading: Incredibly Useful Information About No-Claim Bonus In Motor Insurance

Disbursement of no claim bonus:

An insurer can withdraw the no-claim bonus but it can also provide it to the policy-holder as a part of the sum insured after deducting the premium payable for the policy.

Good claim record incentives:

By maintaining a low claim record, one can avail a rebate on premium as well as enhanced protection.

How to switch your insurance policy to an insurer that offers no-claim benefits?

When you decide to switch your health insurer, ensure that the new insurer accepts the benefits of your existing policy. Additionally, one has to write an application to port one’s policy. One must do this well in advance (at least 45 days) before the expiry of one’s current policy in force.

The wise thing to do would be to carefully evaluate all the pros and cons before making a switch to get that extra sum insured bonus for every no-claim year on your policy.

Interested in exploring some Health Insurance policies? Hit the button below.

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Category: Health Insurance

About Saroni Chakravarti

Saroni loves all things quaint and old world- be it art, music or cinema. She has a special knack for spotting the weirdest traits in people and can't for the life of her understand why she attracts the worst co-passengers. Despite her cynical exterior, she still hopes for a world that will be free from discrimination and cruelty. When she's not spending her day commuting, she can be found watching funny videos, reading, and sending out needy vibes to strays around her.

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