What is Cumulative Bonus in Health Insurance

Everybody at some point looks at health insurance as an option to secure their finances against medical expenses. The regular way of looking into something is to go online and read up. When reading articles written on health insurance, you will find the words ‘No Claim Bonus’ or ‘Cumulative Bonus’. However, the meaning of these two words is similar. The insurance company basically states the benefit provided by the insurance company for not making any claims during the policy year. This benefit is provided as an increase in the sum insured for the next year after renewal year without premium increase. In short, it’s a reward for not having to file any claims and being fit for your health insurance company.

Everybody loves getting a little extra. Similarly, if you get a bonus on the sum assured without paying anything extra, there is bound to be excitement. But this reward is given only when you do not make any claim. The bonus will continue to increase up to a maximum of 100% of your guaranteed amount. This means that if you accumulate a 5% cumulative bonus over the coming years, your coverage will continue to increase indirectly, helping you to get higher coverage due to inflation. Let’s understand what cumulative bonus is and how it works. 

What is a Cumulative Bonus?

Cumulative bonus is the bonus that the policyholder receives if they are fit and do not file a claim. The benefit of the cumulative bonus is provided by increasing the guarantee amount only for each claim-free year after a renewal up to a certain number of years.

How does the cumulative bonus work?

You should know that the percentage of cumulative bonus offered depends on the specific plan you have purchased and the health insurance provider as well. Generally, the cumulative bonus percentage is between 5% and 10%. So, if you do not make a health insurance claim during the policy year, you can increase your sum assured by 10%. Usually, you continue to receive this benefit until you have received a hike of 50% of the original sum assured amount. 

Things to know about cumulative bonuses in health insurance

If you are buying a health insurance policy for the first time with the benefit of a cumulative bonus, be aware of a few things you need to know about this term before proceeding with your choice. They include: 

• Cumulative bonus is one of two types of claim bonus that is included in health insurance. In the case of a cumulative bonus, the amount of coverage increases with the same premium for each claim-free year. The second type is a no claim bonus, in which for each claim-free year, the premium amount is reduced by a certain percentage. You can buy both of these benefits through a health insurance app.
• There is a limit to the coverage that a policyholder can raise through a cumulative bonus. Generally, the upper limit is 50% of the original sum assured. Note that the terms and conditions may vary with health insurance companies.
• The cumulative bonus benefit is available on individual and floater health insurance policies. So, whether you have an individual policy or your whole family is covered under a single plan, you can get the benefit of cumulative bonus.
• Not every health insurance company offers a cumulative bonus benefit. In some cases, if the health insurance company offers a cumulative bonus, there will be a set of terms and conditions associated with it. So, if you are buying a policy with cumulative bonus benefit, make sure that you carefully examine the policy document to better understand the benefits it offers you.
• The bonus benefit is usually valid up to 10 years. 
• The policyholder must renew his policy in a timely manner, i.e. before the expiration date, without losing the entire bonus benefits earned during the policy term. You can use the health insurance renewal app to do so.

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