The concept works on the same lines as the no-claim bonus on your car insurance. Policyholders who haven't made any claim in a year, can use the bonus to their benefit the following year. Companies could either offer an increase in the sum insured or discount on the premium payable, or a combination of both. Most insurers offer a five per cent increase in the policyholder's sum insured. So, a policyholder with asum assured of `5lakh, will get an extended cover of `25,000 the following year. A claim-free third year will see him earning another five per cent extra cover on his base sum insured, taking the total to `5.5 lakh.
Instead of an increase in the sum insured, insurers may also offer a discount in the following year's premium. So, policy holders paying `1lakh as annual premium will get a discount of `5,000.
Some companies offer a discount in the first five years and an increase in the sum insured from the sixth year onwards.
What is the maximum cumulative bonus given?
Unlike motor insurance, there are no year-wise, fixed, cumulative bonus slabs the insurers follow. Though it varies, the maximum bonus given is up to 50 per cent.
What happens if I make a claim in any of the years?
Most insurers nullify any on-going cumulative bonus in such cases, with the policyholder's sum insured reverting to the original amount. If the company is offering discounts as bonus, you will have to pay the standard premiums applicable. However, some companies have relaxed their rules. They reduce the discount, rather than completely doing away with it. So, if you were eligible for a 20 per cent discount, you would only get 10 per cent. In case the policyholder opts for an increase in his sum insured, accumulation of bonus for both the amounts will be done separately. Say, he has a sum assured of `3lakh, on which he enjoys 10 per cent bonus in the second year. If he increases his sum assured to `5lakh in the second year, his bonus for 3lakh and `2lakh would be calculated separately.
If I shift my health insurer, can I transfer the bonus accumulated?
Though it is possible to transfer one's accumulated bonus, it will depend on what type of bonus (increase in sum insured or discount in premiums) the new company offers. Insurers may also impose certain conditions — allowing full transfer up to 45 years of age, but only 50 per cent for those above 45 years. Policyholders need to consider these conditions before making the shift.
