23 Jul 2021

Every time somebody is planning on buying health insurance

The thing that worries them the most is the fear of wasting their insured amount in case they don’t file a claim in the given period. Well, it’s not something to worry about because you can easily make this turn in your favour with a cumulative bonus.

Here’s how it works! Let’s say, you have a health insurance policy and you have not filed any claims in a year since the policy was issued. In a situation like this, as a reward for not filing any claims, the insurer gives you a cumulative bonus in health insurance.

What is a cumulative bonus and how does it work?

A cumulative bonus means an increase or addition in the sum Insured without an associated increase in premium for each claim-free year. If you have had a claim-free year, you are eligible for a cumulative bonus under which your sum insured amount increases by a certain percentage at the time of renewal of your policy.

Even though your insured amount has increased, your premium amount remains the same. The percentage of the bonus amount varies from one insurance company to another. However, the base percentage of the bonus offered is generally between 5% to 10%. But depending on the company and your plan, it can increase up to 100%.

Let’s suppose you have insurance coverage of ₹5,00,000 and the insurance company offers 10% cumulative bonus, then, at the time of renewal, your insured amount will increase by 10% and you will get a new policy with a total insured amount of ₹5,25,000 if you have not filed any claims in a year since the policy was issued.

Things you need to know about no claim or a cumulative bonus Mediclaim policy

• For every claim-free year, you get a progressive increase of a certain percentage on Sum Insured as decided by the insurer.

• You can accumulate a cumulative bonus for a maximum period of 10 years.

• The added amount to the insured sum received through the cumulative bonus helps you keep up with the increasing inflation rate.

• With cumulative bonus health insurance, you get to renew your policy at more or less same premium rates with more coverage.

• It is offered in individual as well as floater health insurance policies.

• To receive the benefits of the cumulative bonus, you have to make sure that you file for renewal on time. If you fail, then you might lose the benefits.

Is there a limit to the cumulative bonus?

The cumulative bonus percentage is decided at the time of buying the policy. Some insurers have a limit on this percentage, while others can go as high as 50% or even 100%. It varies from insurer to insurer as well as it depends on what kind of plan you choose.

Do you lose your cumulative bonus if you make a claim?

If you raise a claim, you are not eligible for a cumulative bonus.

What happens to your cumulative bonus if you switch your insurer?

If you decide to switch from one health insurance company to another, you can do so without losing your cumulative bonus. When you get a new health insurance policy with another insurer, you can transfer your cumulative bonus to that company’s policy. However, the new company may have their own set of terms and conditions

A cumulative bonus is a reward for staying healthy that is compensated in a way that aids you in difficult times. Even though it is subject to many factors like age, policy, and taxes, you are eligible for benefits that will prove useful to you in your later years.

To safeguard yourself and your family from any future medical emergency choose a health insurance plan with Kotak General Insurance and fulfil all your insurance needs.

Team Kotak GIC

The content of this blog has been created and carefully reviewed by the esteemed team at Kotak General Insurance, with the sole purpose of providing valuable guidance and sharing insights on the importance of general insurance. Our objective is to assist users in making informed decisions when purchasing or renewing insurance policies for their cars, bikes, and health. Our expertly curated information aims to empower our readers with the knowledge they need to protect their valuable assets and financial interests.