Understanding Cumulative Bonus in Health Insurance Policies

Understanding Cumulative Bonus in Health Insurance

In other words, this benefit is carried over to the next year in the form of an increase in the limit of coverage (basic Sum insured + cumulative bonus) without any additional cost to the policyholder. It is a reward for not utilising the insurance coverage provided.”

It’s also important to read the fine print of your policy and understand the terms and conditions so you can take full advantage of the cumulative bonus.

In conclusion, it is a fantastic feature provided by a health insurance company that rewards policyholders for staying claim-free and can increase the value of their coverage over time. It is essential to check if your plan has this feature and understand its terms and conditions.

To learn more details about health insurance policies and to buy policies at an affordable premium with good discounts, visit the official website of Star Health Insurance.
 

What is cb amount in health insurance?  In health insurance, it stands for Cumulative Bonus, which is a reward to a person for not filing a claim in a policy year.

What is a Cumulative bonus?

Individuals often ask: What is CB in health insurance? A cumulative bonus in health insurance refers to a reward provided to policyholders for not making any claims during a policy year. It's necessarily an increase in the sum insured (coverage amount) for every claim-free year, without a corresponding premium increase.   

Factors Affecting Cumulative Bonus in Health Insurance

Many factors impact the cumulative bonus in health insurance. Here are the key factors:

1. Claim History

If you make a claim during the policy year, the cumulative bonus might be lowered or reset to zero, based on the insurer’s terms. A few policies permit partial retention of the bonus even after making a claim.

If a minor medical expense arises, it’s advisable to pay out of pocket rather than file a claim. This is because it can help you to reserve your CB amount in health insurance and get more benefits in the future.

2. Policy Renewal on Time

If you fail to renew your health insurance policy on time, you might lose your accumulated bonus. A few insurers offer a grace period (e.g., 30 days), but any lapse beyond this time period can lead to a loss of cumulative bonus. Some insurers allow resetting the bonus if the maximum limit is not reached.

3. Maximum Limit (Capping)

Many insurers round off the cumulative bonus at 50%-100% of the original sum insured. Once you attain the maximum limit, no further bonus is provided, even if you continue having claim-free years.

4. Type of Cumulative Bonus

As mentioned, a few insurers provide cumulative bonuses either as discounts on premiums or an increased sum insured. The impact of claims and policy terms differs depending on the type of bonus provided in the health insurance policy.

5. Portability

If you switch health insurance providers, the new insurer might not transfer your cumulative bonus or might provide only partial credit. It’s important to check portability advantages before switching.

6. Policy Terms Changes

Insurers might revise bonus terms at renewal, so it’s significant to read policy updates. A few insurers might even modify the bonus percentage or claim impact at the time of the policy upgrades.  

Benefits of Cumulative Bonus

There are many benefits of a cumulative bonus. Some of them are:

1. Motivates a Healthy Lifestyle

Cumulative bonuses encourage policyholders to avoid small claims, motivating them to maintain a healthier lifestyle. Getting well-being and preventive care not only safeguards you from incurring medical expenses but also helps enhance your overall life quality.

2. Higher Coverage without Extra Cost

The main advantage of a cumulative bonus reward is that you will get a higher sum insured at no extra cost. This means that you will get to derive more value out of your health insurance coverage at the original premium cost, even at the policy renewal time.
 

3. Financial Security for Future Medical Needs

With the rising healthcare costs, having a higher sum insured at an affordable premium makes unexpected situations manageable and offers better financial security. More claim-free years means means a higher coverage a higher coverage amount. Better insurance coverage ensures your preparedness for future uncertainties.

4. Advantageous for Senior Citizens

Senior citizens benefit significantly from cumulative bonuses, as they face a higher risk of hospitalisation and critical illnesses. They can utilise the increased sum insured during medical emergencies.

5. Long-Term Savings

Senior citizens benefit significantly from cumulative bonuses, as they face a higher risk of hospitalisation and critical illnesses.

6. Useful for Family Floaters

Family floater can benefit more as any family member covered under the policy can utilize such high Sum insured. If no claims for longer period then, you and your family can get enough insurance coverage eventually. For this reason, it is more advantageous for family floater policies.

Why is a Cumulative bonus needed?

A cumulative bonus in health insurance is required to reward policyholders for remaining claim-free for a policy year. This bonus generally increases the sum insured, offering greater financial security without an increase in premium. It also induces policyholders to maintain a healthy lifestyle and avoid unnecessary claims, ultimately providing a benefit to both the individual and the insurer.  

When is a Cumulative bonus required?

A cumulative bonus in health insurance is applied during policy renewal time, provided the insurance policyholder has not made any claims during the previous policy year. It necessarily rewards health insurance policyholders for staying healthy and not using their health insurance coverage. This bonus is usually included in the sum insured, thus increasing the insurance coverage amount without increasing the premium.     

What is the difference between a cumulative and a no-claim bonus?

In health insurance, a cumulative bonus increases your sum insured for each claim-free year, while a no-claim bonus (NCB) offers a discount on your renewal premium for claim-free years. In general, it increases your health insurance coverage, while an NCB lowers your costs.

In a cumulative bonus, for each year you don't make a claim, your health insurance policy's sum insured is increased by some percentage or fixed amount. In a no-claim bonus, the total sum insured of your policy typically remains the same.  

How to check for the cumulative bonus needed for the health insurance plan?

To check for the cumulative bonus in your health insurance plan, you must refer to your health insurance policy document. The bonus amount or percentage is generally mentioned there, along with the terms and conditions for its application. You can contact your health insurance provider directly for better clarification.

1. Policy Document

• Look at your policy document, which outlines all the information about your coverage, including the cumulative bonus.
• See for sections associated with the "Cumulative Bonus", "No-Claim Bonus", or other similar terms.
• The document will mention the percentage increase in your sum insured for every claim-free year.

2. Health Insurance Provider

• If you are unable to find out the details in your health insurance policy document, then you can contact your health insurance provider directly.
• They can offer you the particular information about your cumulative bonus and how it applies to your health insurance plan.
   

3. Understand the Bonus

• It is generally provided as a percentage increase in the sum insured for every claim-free year.    
• For example, if you have a sum insured of ₹5 lakhs and your health insurance policy provides a 10% cumulative bonus, your insurance coverage will increase by ₹50,000 for every claim-free year.
• There might be a limit on how much the cumulative bonus can increase your health insurance coverage.

4. Significance of Claim-Free Years

• The cumulative bonus is directly related to the number of claim-free years you have in your health insurance policy.
• If you make a claim in a policy year, the bonus might be lowered or reset, based on the terms of your health insurance policy.
• It's important to understand how your insurance policy manages claims and their impact on the cumulative bonus.