Health Coverage with Bonus Benefits :With medical inflation soaring at 15% annually, managing healthcare expenses has become a challenge. However, health insurance policies with attractive bonus features can help policyholders offset rising costs.
Health Coverage with Bonus Benefits
“By offering a bonus, insurers incentivize customers to stick to them,” says Siddharth Singhal, Head of Health Insurance, Policybazaar. While premiums may increase over time, a well-structured bonus-linked policy effectively lowers the cost per lakh of sum insured.
Types of Bonuses in Health Insurance
Insurance providers offer three main types of bonuses
No Claim Bonus (NCB): The sum insured increases if no claims are made. However, in case of a claim, the accumulated bonus may reduce or not be added for that year.
NCB with Retention: Similar to NCB, but even if a claim is made, the accumulated bonus does not decrease.
Guaranteed Bonus: This bonus accrues annually irrespective of claims and remains unaffected. “This is gaining popularity as it effectively counters medical inflation,” says Ashish Yadav, Head of Products & Operations, ManipalCigna Health Insurance.
Bonus Accumulation and Limits
Insurers set bonus accrual rates and maximum limits in their policy terms. Annual bonuses range from 5% to 100%, with accumulation caps varying from twice the sum insured to unlimited.
“Most policies offer a 20-50% annual bonus, typically capped at 100%,” says Kapil Mehta, Co-founder, SecureNow. Some insurers also provide riders to accelerate bonus accumulation.
“For example, if your base plan offers a 50% bonus, adding a bonus booster rider can push it to 100% per year with no cap,” says Singhal.
Impact of Claims on Bonus
A claim can reduce the accumulated bonus, depending on policy terms.
Example: If a policy offers 100% bonus accrual per year and a customer remains claim-free for two years, the sum insured gets 200% additional coverage.
A claim in the third year stops further accrual and reduces the bonus to 100%.
A claim in the fourth year may bring the bonus amount to zero.
How to Choose the Best Bonus-Linked Policy?
Opt for a high base sum insured.
“A decade ago, medical inflation was 5-7%, but now it exceeds 15% and is rising due to advanced medical technology. A base sum insured of ₹50 lakh to ₹1 crore is essential, followed by a strong bonus structure,” says Yadav.
Select policies with a 50-100% guaranteed annual bonus that remains unaffected by claims.
Without this, the core need of managing inflation remains unmet. Avoid policies that discourage claims through restrictive bonus terms.
Port to a policy with a bonus feature if your existing one lacks it.
“Many customers in older policies do not receive any bonuses despite not making claims. They should consider porting to a policy with a strong bonus feature,” advises Mehta.
Conclusion
With healthcare costs rising rapidly, selecting a bonus-linked health insurance policy can be a smart move. A well-structured bonus system can significantly increase coverage without extra cost, helping customers fight inflation effectively.
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