Role of Cumulative Bonus in Health Insurance Policy

Cumulative Bonus in Health Insurance Policy

Over the years, people in India have become quite concerned about their health. This is why along with taking good care of their health; many people these days are buying a health insurance policy. Even when we are the fittest, we may fall sick. And a health insurance policy comes as a great help, especially when a policyholder is hospitalized.

Nevertheless, do all of us who have a health insurance plan, use it? Well, many among us never claim our health insurance policy during the policy period. To appreciate their health and their effort to keep themselves fit, the health insurance companies offer them a cumulative bonus.

What is a cumulative bonus in health insurance?

A cumulative bonus means a reward that the policyholders are provided by the insurance companies for being fit and not filing a claim during the policy period. The benefits that come with a cumulative bonus are offered in the renewal year, in which the insurance provider increases the amount of sum insured up to a certain year for each claim-free year.

How does cumulative bonus work?

The percentage of the cumulative bonus offered by the insurance company to the policyholders totally depends on the insurer and the plans that have been offered to them. The percentage of the cumulative bonus ranges between 5% and 10%. This means that if you do not make a claim during the entire year while renewing the policy and upon its renewal, you might get up to 10% added to your sum insured.

Now to make the concept even clearer, let us take an example for the same. A health insurance company provides a bonus of 50% to the policyholder to increase the sum insured. The policyholder invested in his policy around INR 2 lakh. In one such case, the sum insured available in the following claim-free year will be INR 3 lakh. And after two claim-free years, the sum insured will become INR 4 lakh.

Things that you should know about cumulative bonus in health insurance

If you are going to buy a health insurance policy with a cumulative bonus benefit, you need to be aware of certain things about the term before you proceed.

• Of the two types, a cumulative bonus is the one in which no claim bonus works in health insurance. As we talk about a cumulative bonus, the coverage amount increases for each claim-free year, while you have to pay the same premium amount. The other type is discount in premium. In this type, the premium amount will decrease by a particular percentage in each claim-free year.
• There is a limit on the coverage that a policyholder can increase through the cumulative bonus. Usually, this limit is somewhere between 50% and 100%. You need to know that the terms and conditions may vary from one health insurance company to the other.
• Cumulative bonus benefit comes in two forms, individual as well as family floater health insurance policies. Therefore, whether you have an individual health insurance policy or a family floater insurance under a single sum insured amount, you can rest assured of being eligible for a cumulative bonus.
• Each health insurance company does not come with the benefit of a cumulative bonus. Even if one such company is offering a cumulative bonus, there will be some terms and conditions that will be related to one such bonus. Therefore, if you are buying a health insurance policy that comes with a cumulative bonus benefit, you need to ensure of reading the documents that are related to the policy, very carefully. This will further help you to have a better comprehension of the benefits that are offered.
• The bonus is usually accumulated up to a maximum period of 10 years.
• A policy should be renewed on time by a policyholder. This means it should be renewed before the expiry period so that you do not lose the cumulative bonus benefits that have been accumulated during the policy term.
• If the claim overlaps with two health insurance policies, you will be able to get the benefits of the sum assured. You must know that in one such case, the cumulative bonus is never zeroed down.
• You can withdraw the cumulative bonus either after deduction of the premium or as a whole.

Benefits of cumulative bonus in health insurance

A few of the benefits of a cumulative bonus are mentioned herein below:

• Your health insurance company will reward you once you complete a claim-free term
• The reward will be an increased sum insured or a discounted policy premium
• You can save some money by avoiding a higher premium for more coverage
• In an alternative way, you can choose to pay less for similar coverage. However, it depends much on the terms and conditions of the insurance company
• The cumulative bonus can be accumulated up to a policy period of 10 years
• The cumulative bonus can be used for settling small medical costs
• A cumulative bonus helps you to stay healthy so that no medical expenses are incurred.

Some of the insurance companies that offer a cumulative bonus in health insurance are:

Health insurance providers	Policy offering cumulative bonus benefit
HDFC ERGO	Easy Health & my: health Suraksha
Care Health Insurance	Joy
ManipalCigna	ProHealth
Bajaj Allianz	Health Guard
Max Bupa	Health Companion
Aditya Birla	Activ Health Enhanced