Know More About Cumulative or No-Claim Bonus and Its Essentials

A cumulative bonus, often called a no-claim bonus, is one of those health insurance features that quietly adds value year after year. Many policyholders hear about it but do not fully understand how it works or why it matters so much in the long run. Simply put, it rewards you for staying healthy or at least for not making claims during the policy year.

Over time, this bonus can significantly increase your coverage or reduce your premium without asking you to pay extra. That is why understanding its essentials is important, especially if you plan to keep your policy active for many years.

What is a cumulative bonus in health insurance?

A cumulative bonus in health insurance is a benefit that the insurer offers to you, in case you do not claim any coverage in the current year. This means that every claim-free year earns you a benefit that can be in any form, related to the policy. 

The health insurance provider companies either offer an increase in the sum insured or a discount on the premium payable ,or a combination of both options as a cumulative or no-claim bonus in health insurance.

Most of the insurers pay a cumulative bonus, like a 5% increase in the cover. However, if you have a claim-free third year, you can expect another 5% increase in the base of the sum insured. The insurer may also offer a discount on the premium amount, which means you have to pay a lesser premium for the same cover.

Maximum Cumulative Bonus Offered:

There are no fixed or year-wise slabs for the cumulative bonus. However, in general, the maximum cumulative bonus in health insurance given be as high as 150% of the sum insured.

Does Any Claim Affect the Cumulative Bonus?

Yes, claims do affect the cumulative bonus, but the impact depends on the policy terms. Most insurers follow a simple rule. If you make a claim during the policy year, the cumulative bonus earned until then may be reduced or reset.

Here is how it usually works in practice:

• If no claim is made, the insurer increases your bonus at renewal.
• If a claim is made, the accumulated bonus may be reduced by a fixed percentage or drop to zero.
• Some modern policies protect the bonus even after a claim, but only under specific conditions.

To make it clearer, look at the table below:

It is also important to remember that not all claims are treated the same way. In some policies, claims for daycare procedures or preventive check-ups do not impact the bonus. Always check the wording carefully.

Cumulative Bonus and Portability

Portability allows you to switch from one insurer to another without losing certain benefits. A cumulative bonus is one of those benefits that policyholders worry about when planning a switch.

The good news is that the cumulative bonus can be carried forward during portability, subject to insurer rules. When you port your policy, the bonus you have earned is usually added to your existing sum insured with the new insurer.

A few key points to keep in mind:

• The bonus is transferred as an increase in sum insured, not as a premium discount.
• The new insurer may cap the bonus at a specific limit.
• Documentation of your previous policy history is essential.

Portability makes sense when your existing policy no longer meets your needs, but the cumulative bonus should always be factored into the decision. Losing years of accumulated benefits due to poor planning can be disappointing.

Essential Facts About Cumulative Bonus in India

Indian cumulative bonus regulations are based on guidelines provided by regulators, although freedom remains in the way insurers design them. It is better to know the primitive facts in order to prevent unexpected financial surprises in the future.

Some essential points worth noting:

• The bonus is often given as a percentage increment in sum insured, usually 5 to 50 per cent for every claim-free year.
• The majority of insurers impose a maximum limit, which is usually 50%, 75% or 100% of the base sum insured.
• The bonus applies only if the policy is renewed without a break.
• It is available on both individual and family floater policies, though terms may differ.

Another important fact is that a cumulative bonus does not mean free insurance. You still pay the renewal premium. The benefit lies in enhanced coverage or lower cost, not in eliminating premiums altogether.

Types of Cumulative Bonus in Health Insurance

Not every cumulative bonus operates in the same manner. They are provided in two general forms by insurers. The difference can assist you in selecting a policy that is consistent with your long-term objectives.

Bonus on Sum Insured

This form of cumulative bonus is more valuable and the most common. Every year you have no claims, your amount insured will grow by a predetermined percentage, but the premium will not rise in the same proportion.

Indicatively, when the base sum insured is 5 lakh, and a cumulative bonus of 10 per cent is applied:

• Coverage increases to 5.5 lakh after 1 year of no claims made.
• Coverage will be 6 lakh after 2 claim-free years.
• This goes on until the maximum cap is achieved.

The greatest benefit in this is financial comfort. Healthcare expenses are becoming increasingly costly each year, and this bonus will allow your coverage to keep up with that without extra financial effort from your end.

Discount on Premium

In this format, instead of increasing the sum insured, the insurer offers a discount on the renewal premium for every claim-free year.

Key characteristics include:

• The discount is usually a fixed percentage.
• The base sum insured remains unchanged.
• If a claim is made, the discount may be withdrawn.

While this option lowers immediate out-of-pocket costs, it does not increase coverage. For long-term protection against high medical bills, a bonus on the sum insured is often considered more practical.

How to Maximise Your Cumulative Bonus

Earning a cumulative bonus is not just about luck. With some planning and smart usage of benefits, you can protect and grow it steadily over the years.

Avoid Filing Small Claims

One of the most effective ways to protect your cumulative bonus is to avoid filing claims for small medical expenses. Minor consultations, basic tests, or short-term medicines can often be managed out of pocket.

Why this helps:

• A small claim can wipe out years of accumulated bonuses.
• The financial gain from claiming may be less than the long-term bonus loss.

It is always wise to do a quick comparison before raising a claim. Sometimes, paying a small amount yourself saves much more in the future.

Choose a Policy With a Higher Base Sum Insured

The cumulative bonus is usually calculated as a percentage of the base sum insured. A higher base automatically means a higher bonus value.

Consider this comparison:

Starting with adequate coverage ensures that every bonus increase adds meaningful protection. It also reduces dependence on filing claims for moderate expenses.

Use Wellness Rewards and Cashless Benefits

Many insurers now offer wellness programs, health check-ups, and cashless services that do not impact the cumulative bonus. Using these benefits smartly can help you stay healthy without triggering claims.

Some practical tips include:

• Use free annual health check-ups instead of claiming diagnostics.
• Prefer network hospitals with cashless preventive care benefits.
• Track wellness reward points that can offset small expenses.

These features support your health goals while keeping your cumulative bonus intact.

FAQs 

• Does every health insurance policy offer a cumulative bonus?

No, not every policy offers a cumulative bonus. While it is common in comprehensive health insurance plans, some basic or short-term policies may not include it. Always check the policy brochure or wording before buying.

• How much can my sum insured increase with a cumulative bonus?

The increase depends on the insurer’s terms. Most policies allow the sum insured to increase by 50% to 100% of the base amount over multiple claim-free years. Some modern plans may allow even higher limits, but caps are always defined.

• Does making even a small claim reduce my cumulative bonus?

In many cases, yes. Even a small claim can reduce or reset the cumulative bonus. However, some policies exclude specific claims from affecting the bonus. Reading the fine print is essential to avoid surprises.

• Is a cumulative bonus available for family floater plans?

Yes, a cumulative bonus is available for family floater plans as well. The bonus applies to the total sum insured shared by all members. If any insured member makes a claim, the bonus impact applies to the entire policy.

• Will the cumulative bonus increase my premium?

No, a cumulative bonus does not directly increase your premium. You get higher coverage or a premium discount without paying extra for the bonus itself. Premiums may still rise due to age or medical inflation, but that is separate from the bonus benefit.