• Even in 2023, are you contemplating whether investing in medical insurance is worthwhile?

The response is undoubtedly a resounding ‘Yes’.

• The increase in healthcare service costs has made it evident that health plans are essential. When purchasing health insurance online, it’s vital to explore all options to maximize your coverage benefits. One such option is the cumulative bonus, a feature provided by numerous health insurance companies.

• In this article, we will explore the idea of cumulative bonus, its advantages, and how it can assist you in obtaining better coverage over time.

• What Is a Cumulative Bonus in health insurance?

A cumulative bonus in health insurance is a reward mechanism provided by health insurance firms to policyholders who do not file any claims during a policy year. Under this feature, the insured party gains a bonus as an increased sum assured or a decrease in the premium due for the following policy year (subject to the insurer). *

• It is essential to recognize that cumulative bonus and no-claim bonus are distinct concepts.

Cumulative bonus (CB) is available in health insurance policies. In most situations, the bonus is reflected in the sum insured. Only a few insurers grant policyholders a discount on the premium amount. Conversely, a no-claim bonus (NCB) is available in motor insurance. The bonus is provided in the form of a reduced premium.

• The cumulative bonus can reach up to 150% of the sum assured. In contrast, NCB has set limits that begin at 20% and conclude at 50%.

• How Does Cumulative Bonus Work?

The cumulative bonus is typically provided as a percentage increase in the sum assured for each claim-free policy year. The percentage increase differs among insurance providers and can range from 5% to 10% each year. For instance, if you have a health insurance policy with a sum assured of Rs. 5 lakhs and a cumulative bonus of 10%, and you do not file any claims in a policy year, the sum assured for the next policy year would be enhanced by Rs. 50,000 (10% of Rs. 5 lakhs).

• What are the Benefits of Cumulative Bonus?

1. Increased Coverage

The key advantage of a cumulative bonus is the gradual growth in the sum assured over time. With each claim-free year, the coverage amount expands, giving you greater financial protection against medical costs. This enhanced coverage can be advantageous in light of increasing healthcare expenses. Claims are subject to the terms and conditions outlined in the health insurance policy. *

2. Cost Savings

In some instances, the cumulative bonus is presented as a discount on the premium payable for the next policy year. This signifies that not only do you obtain higher coverage, but you also benefit from cost savings on your health insurance premiums. It is an encouraging way to reward policyholders for maintaining a healthy lifestyle.

3. Long-term Value
   The cumulative bonus characteristic fosters a long-term relationship between the insured individual and the insurance provider. By incentivizing policyholders who refrain from making claims, insurance companies motivate individuals to remain committed to the policy for loyalty and a lasting relationship. *
4. Provides Motivation For A Health-Conscious Lifestyle

The cumulative bonus serves as a motivation for policyholders to enhance their health and engage in preventive actions. Policyholders can not only prevent claims, but also reap the rewards of a cumulative bonus. *

Points To Consider about Cumulative Bonus

• Review Policy Terms

It is essential to thoroughly analyze the terms and conditions of the health insurance policy regarding the cumulative bonus feature. Grasp the particular standards, waiting periods, and restrictions related to earning and using the bonus. Various insurance providers may have different guidelines and terms, so ensure that you are informed about the details of your policy.

• Evaluate Policy Renewal

The cumulative bonus gained in one policy year is usually applicable only if you renew the health insurance policy with the same insurance provider. If you change to another insurance company, you must verify the portability of the cumulative bonus. Therefore, assess the advantages and features of your current policy before contemplating a switch. *

• Comparison Between Cumulative Bonus and No-Claim Bonus

• Feature
• Cumulative Bonus (CB)
• No-Claim Bonus (NCB)
• Definition
• A benefit for claim-free years that enhances the sum insured without additional cost.
• A reduction on the premium for not filing claims during the policy duration.
• Benefit Type
• Augments the coverage limit.
• Lowers the renewal premium.
• Applicability
• Commonly found in health insurance.
• Commonly found in motor insurance.
• Influence on Premium
• Premium stays the same.
• Premium decreases with each claim-free year.
• Restrictions
• Maximum increase limit is enforced.
• Discount percentage is limited.
• Effect of Claims
• Sum insured increase may cease or reset.
• NCB may diminish or reset to zero.

Conclusion

In conclusion, the cumulative bonus feature in health insurance represents a significant benefit that rewards policyholders for sustaining a healthy lifestyle and avoiding claims. By presenting such incentives, it motivates individuals to buy a health insurance policy to obtain comprehensive financial protection for medical emergencies. Utilize the health insurance premium calculator prior to acquiring your policy to enjoy the advantage of not only a cumulative bonus but also of the additional features provided in the policy.remium calculators to ensure you obtain the appropriate insurance plan for the best value.