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Cumulative Bonus in Health Insurance Policies

 

            

Cumulative bonus is a benefit offered under health insurance plans, to the policyholders for maintaining zero claims throughout the policy period. Offer of cumulative bonus is either in the form of an increase in the sum insured or a discount on the policy premium, at the time of renewal of policy. However, there is a cap on the cumulative bonus offered and is mostly restricted to 50% of the sum insured.

How does cumulative bonus work?

 For example, sum insured under a health insurance policy is Rs 5 lakhs, the cumulative bonus is 10% of the insured sum for each year.

First year sum insured is: Rs 5 lakhs

Second year sum insured if no claim is made: Rs 5,50,000/-

Third year sum insured if no claim is made: Rs 6,00,000/-

 

One must plan their health insurance program in such a way that the cumulative bonus is retained for major health claims. Also, it is beneficial to handle small claims as the cumulative bonus adds to the sum insured and increases the sum insured free of cost.

 

Some health plans offer a premium discount rather than raising the sum insured.

For e.g.: Premium for policy is Rs 15000/- per year,

Discount in premium is 5 % for a claim free year

At renewal of the health policy this discount is applied on the premium and substantial premium is saved.

Key points of cumulative bonus feature in health insurance

·       Cumulative bonus usually applies only to indemnity-based health insurance plans

·       Cumulative bonus is subject to a maximum limit and is a percentage of the sum insured, depending on the insurer and the plan

·       Cumulative bonus is transferable to another insurer, if health policy is ported and is subject to terms and conditions

·       Cumulative bonus is reduced by a fixed percentage if a claim is made in a policy year

 

What Is the importance of a cumulative bonus in health Insurance?

Cumulative bonus has a significant role in the health insurance policy. To simplify:

·       Cumulative bonus is offered either as a discount in premium or as an addition in sum insured.

 

·       It encourages policyholders to avoid unnecessary medical expenses.

 

·       For major medical expenses the additional sum insured that is accrued is beneficial to the policyholder as it is obtained free of cost.

·       Cumulative bonus is available for both individual and family floater health insurance policies.

·       Any member in a family floater policy can avail the cumulative bonus on the sum insured, for claim-free years. 

·       Cumulative bonus remains with the policyholder even after policy is switched to another insurer.

What if a claim is made after getting cumulative bonus?

If a claim is made after receiving one or more cumulative bonuses, the benefit is reduced to the next lower percentage and so on. If one was enjoying 20% cumulative bonus, after a claim, it is reduced to 10% as per the table of cumulative bonus.

 

Before finalizing one’s health insurance program a comprehensive analysis of the coverage, benefits and policy processes must be made, for optimum utilization of the policy. The age band of family members, the existing illnesses, if any, genetic disposition etc. must be looked into before opting for the right insurance cover.

 

Cumulative bonus is an added incentive to increase health coverage without paying any extra premium. It encourages one to maintain a healthy lifestyle and helps avoid unnecessary claims, which can benefit one’s finances. 
 

It is recommended to evaluate all the different health policies, understand the terms and conditions, select the one that suits the family needs / requirements and which is cost-effective in the long run.

We at Zen Insurance help you in choosing the right health insurance cover. Plan your insurance program wisely and contact us for assistance.

FAQS

 

If I don't renew my health insurance, what will happen to my cumulative bonus?

 Grace period is allowed for renewing a health insurance policy. Grace period for renewal of policy varies with each insurer. Most insurers follow 7 days grace period. If policy is not renewed after grace period, then the cumulative bonus is lost.


Is it possible to receive a 100% discount on health insurance premium as a cumulative bonus?

 No. Discount will not exceed 25% in most policies.


What is the maximum increase in the insured amount under a cumulative bonus?

 Increase in sum insured can be allowed up to 50 % of policy sum insured.


Is there a No Claim/Cumulative Bonus add-on available?

 No. Cumulative bonus is an incentive offered for maintaining claims free policy. Cumulative bonus cannot be purchased as it is a bonus offered by the insurer.

 

Disclaimer:

Zen Insurance Brokers is an IRDAI registered broker which facilitates quick & accurate insurance broking services. We deal with only regulator approved products of insurers. We do not underwrite the products.

 

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