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SMC Insurance Brokers Pvt. Ltd.
Parsvnath Metro Mall, Near Pratap Nagar Metro Station, Pratap Nagar, New Delhi-110007
Registration No: 289, Registration Code No: IRDAI/DB-272/04/289, Valid till: 27/01/2026, License category: Direct Broker (Life & General), CIN: U66000DL1995PTC172311
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No Claim Bonus In Health Insurance
Rewards are a delight, who doesn't like them? Every time you buy something, you try to find the best deals, bargains, discounts, cashback, or rewards.
Health insurance offers rewards too. Yes, you heard that right!
The purpose of health insurance is to safeguard you against hospitalisation expenses incurred due in times of a medical crisis. For your policy to remain active, you must pay premiums. And, when you file a claim, the insurer will compensate you based on the sum insured.
However, what happens if you don't file a claim for a year? If you don't make a claim, the insurance company rewards you with a No-Claim Bonus. Let's see what a No-Claim Bonus is and how it works.
What Is A No Claim Bonus?
The No Claim Bonus in health insurance refers to a reward given to you for every year you go without filing any claims. The insurer offers the reward because you stayed healthy throughout the policy period and didn't make any claims,
How Does The No Claim Bonus work?
Your insurer may reward you with the No Claim Bonus in two different ways -
-
Enhancing The Sum Insured
Insurance companies increase the sum insured by a certain percentage each year, such as 10% or 20% etc., depending on the NCB. However, the premiums don’t increase.
If the NCB is 10% this year, the sum insured becomes,
110% - next year
120% the following year and so on.
However, there may be a cap to the NCB. This means that even if the number of years in which you have not made a claim increases, the sum insured won’t.
Let's Understand This Concept Better With An Example:Say Mehak has a Health Insurance of Rs 10 lakhs, with an NCB of 10%. The NCB is capped at 50% of the Sum Insured.
| Year | Claim | NCB (10% per year) | Sum Insured |
|---|---|---|---|
1st year |
✕ |
- |
10,00,000 |
2nd year |
✕ |
- |
11,00,000 |
3rd year |
✕ |
1,00,000 |
12,00,000 |
4th year |
✕ |
100000 |
13,00,000 |
5th year |
✕ |
100000 |
14,00,000 |
6th year |
✕ |
100000 |
15,00,000 (Maximum limit reached) |
7th year |
✕ |
0 |
15,00,000 |
8th year |
✕ |
0 |
15,00,000 |
9th year |
✕ |
0 |
15,00,000 |
-
Lowering Your Premium
Your health insurance policy depends on the level of risk your insurer assumes while covering you. If you don’t file a claim, the insurer may offer you a discount on the premium as the NCB.The reduced premium has no impact on the sum insured.
However, only a few insurers offer this option.
Let’s have a look at Mehak’s example again. Suppose she pays a premium of Rs 20,000 per year for a Sum Insured of Rs 10 lakhs per year. For every claim-free year, the insurer offers a 10% discount on the premium.
Discount on premium = 10% of 20,00,00 = Rs 2,000
Consequently, if Mehak doesn't make a claim this year, the renewal premium will be reduced to Rs 18,000. Even though her premium amount has decreased, her sum insured of Rs 10 lakh remains the same.
Drawbacks Of No Claim Bonus
-
Every Claim Reduces The Sum Insured
The NCB begins to decrease as soon as a claim is made, which results in a reduction in the Sum insured. Let's recall Mehak's example.
| Year | Did you file a claim? | NCB (10% per year) | Sum Insured |
|---|---|---|---|
1st year |
✕ |
- |
10,00,000 |
2nd year |
✕ |
1,00,000 |
11,00,000 |
3rd year |
✕ |
1,00,000 |
12,00,000 |
4th year |
✕ |
1,00,000 |
13,00,000 |
5th year |
✕ |
1,00,000 |
14,00,000 |
6th year |
✕ |
1,00,000 |
15,00,000 (Maximum limit reached) |
7th year |
✓ |
-1,00,000 |
14,00,000 |
8th year |
✓ |
-1,00,000 |
13,00,000 |
9th year |
✓ |
-1,00,000 |
12,00,000 |
When a claim is made in the 7th and subsequent years, it is apparent that the sum insured decreases at the same rate as the NCB. It can be seen that the cycle continues in the following years too when claims are made.
-
There Is No Impact On The Benefits
Other than the sum insured, this NCB does not affect other benefits or eligibility such as room rent etc.
For example, the cap for a room rent is usually 1% of the Sum insured if the Sum insured is less than 5 lakhs per year.
Let's say Abinay has a health insurance policy with a sum insured of 4 lakhs; the limit on his room rent is Rs 4000 per day. NCB for his policy is 10%, and so the Sum insured will increase by 10% every claim-free year. Though his Sum insured increases every year, the room rent will remain the same at Rs 4000.
Now, the room-rent limit can have a significant impact on the overall bill due to the 'proportionate deductions'. A proportionate deduction is imposed when you choose a room whose tariff exceeds your policy's room-rent cap. As a result, you will have to pay a substantial sum of money out of your own pocket.
-
There Is No Effect On The Renewed Sum Insured -
When you renew your health insurance policy and you increase or decrease your sum insured, you should be aware that -
The No Claim Bonus will not be applied to the renewed sum insured.
NCB will be calculated based on the previous year's policy sum insured.
So, if Mehak has health insurance with a sum insured of Rs 10 lakhs but decides to upgrade it to Rs 20 lakhs on renewal, the No Claim Bonus will be calculated on her last year's sum insured, meaning 10 lakhs, but not on the renewal amount, which is Rs 20 Lakhs.
-
Not Applicable For Some Health Insurance Benefits
Your health insurance will not allow you to use the accrued bonus for certain health-related benefits such as -and post-hospitalization costs (check-up fees, diagnostic test costs, etc.).
Second medical opinions
Maternity expenses
Newborn baby cover
Consultations or health check-ups
First-year vaccinations, etc.
Note to remember: NCB is not a fundamental part of your existing financial coverage. The bonus is just a backup that can help to protect you if you don't have enough coverage during a given year.
Show More
Is A Higher NCB Percentage Better Than A Lower One?
-
Case 1
Anand, a 25-year-old, has a health insurance policy with a sum insured of Rs 10 Lakhs. Let’s say that his NCB is 10% every year, up to a 100% cap.
-
Case 2
Ajay, a 30-year-old, has taken a health insurance policy with a sum insured of Rs 10 lakh. Let’s say that his NCB is 50% every year, up to a 100% cap.
Let’s compare both the cases -
| Anand’s Higher NCB | Ajay’s Lower NCB |
|---|---|
Anand’s cover will reach the maximum limit in 10 claim-free years. Even if he makes a claim, the policy will still decline at 10%. This gradual reduction can prove to be useful at a time when he needs the policy to protect him during his old age. This is due to the fact that the sum insured shall still be higher than the base amount due to the slow decrease. |
Ajay’s cover will reach the maximum limit in two years. It will also reverse at the same pace, reaching the initial sum insured in two years. His medical emergencies resulted in a claim in his 44th and 45th years. In two years, his sum insured will be the original amount again. |
Summing Up!
A No-Claim Bonus is definitely a helpful feature when it comes to health insurance. Ensure that you read your policy wordings thoroughly to know the NCB percentage applicable to your policy and the benefit it offers.
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Our Customers' Stories
Sharing the experience of happy and satisfied customers with you.
Sameer Yadav
I was searching for investment plan but I couldn't find it, then I got the call from SMC insurance and they aligned a call with Ishita Sharma as point of contact (POC) for all my queries and she explain me very well. Ishita explain me all investment plan with advantage and disadvantage, I really appreciate her. Ishita always enthusiast towords work and ready to answer all my questions .I have taken two policies ( HDFC click to invest) plan with 15k premium per month. I always recommend SMC insurance to all, for better life and happy retirement with huge health and wealth. Thank You SMC insurance for your best service. Special thanks to Ishita for E2E help and endless support, you did fabulous work. Show More
Dheeraj Bhatia
I am associated with SMC insurance since 2011 and found them to be most ethical, trustworthy and highly responsive. Some of my precious policies done thru other agencies are still running on SMC’s advice. That is a strong testimony to their customer-centric approach. I am glad to be associated with SMC and strongly recommend their services to all concerned. Wishing the very best to Team SMC !Show More
Jyoti Sharma
We were fortunate enough to have selected SMC as our Health Insurance Broker for they have been very helpful in resolving our queries related to health insurance. I would like to cite two examples where SMC's role has been very crucial. One was when payment for cashless hospitalization was not coming through as the insurance company was taking undue longer time to approve the Hospital Bill. It was then I talked to Neha and it was she who through her contacts in the Insurance co. facilitated and expedited the approval for payment of hospital bill. Second was very recently when the Insurance co. had proposed a top up "Enhancer" policy for our existing policy. When I talked to Neha she immediately told me not to take this policy being offered without any medical test as it will not be beneficial to us and may create problem later on account of recent hospitalization. If I had I not consulted Neha, I would have into a big trouble with the insurance co. These two instances speak very high of sincere advice and timely help rendered by the SMC Staff, Ms. Neha Khanna which helped us a lot in time of need.Show More
Sumit Khanna
Hi, I am Sumit here, purchasing insurance policies from SMC for almost 8 years. Would like to recommend this company to other customers because they are taking care of my insurance broking services in a fabulous way. I would like to extend my gratitude and thanks to policy servicing and also insurance claim backend services. They have rendered fantabulous services for me and would like you guys to definitely go and rely on them for all your insurance needs.Show More
Kishor Kumar Bijlani
My experience with SMC Brokers is excellent. They provide support from the beginning till end i.e from issuance of insurance policies till settlement of claims. They explain very nicely various provisions relating to Insurance Policy also facilitate settlement of claims with Insurance Companies. Show More
Megha Singhal
I have purchased HDFC policy from SMC Insurance with the help of Harsh Sharma. I have got the satisfactory services from SMC Insurance. Thank you SMC Insurance.Show More
