Medical expenses are rising every year. New developments in the field of health science are leading to the prolonging of one’s age. Moreover, treatments have not only become more effective and advanced but also more expensive and complicated.
In such a situation, health insurance has become a dire need. For a patient suffering from a chronic disease, medical treatment never ceases. It is practical for such people to procure a health insurance so as to economize their condition. After all, it’s never prudent to spend everything you earn, especially only on medical needs.
Why Are Health Insurance Plans So Coveted?
For everyone in general, having a health insurance gives you backup for unpredicted circumstances, for instance, an accident. When such an unexpected thing occurs, naturally not many will be prepared with the financial demand of it.
Whereas, when you’re insured with a health insurance for a long time and do not claim any money per year, a no-claim bonus is added to the sum insured. This helps you to save some money every year in the case of medical emergency.
What Do You Mean By No-Claim Bonus?
If you’re familiar with yearly contracts, then you’ve already understood half of the concept. Health insurance is typically an annual bond of investment where you need to renew the health insurance policy every year.
Now, unless one is suffering from a pre-existing condition, it’s not usual to require hospitalization every year. Therefore, you might not claim the insurance money annually. In such cases, there is an additive payment on the sum insured which is the no-claim bonus. So, the sum insured paid gets incremented, and hence, you do not suffer any loss for not claiming the money that year.
Upon renewal of health insurance policies, the insurer adds a fixed interest on the sum insured. Now, most health insurance plans offer a no-claim bonus of 10% (of the base sum insured) up to 50%. Let us draw up a thought-up scenario. If initially, you had insured Rs. 1 lakh, then in 5 no-claim years, your sum insured would bump up to Rs. 1.5 lakh.
Now, you’re probably thinking if you’ll end up paying a higher premium. The bonus sum insured does not demand any extra payment. But, as you grow older, the premium will ask for more. Also, some insurers provide a double opportunity with every no-claim year by providing a 50% increment. But it’s not, so that no-claim bonuses, with its tempting possibilities, will stop you from making an insurance claim. Even claims impact the sum insured in some manner.
How Does Claiming Work On The Sum Insured?
On making a claim, the bonus is affected slightly. This was different earlier, where the entire bonus was forfeited due to the claim. New rules and amendments to such clauses have led to a change that helps this setback somewhat.
The accumulated claim bonus is reduced by the same factor once a claim is issued on the health insurance. Let us explain this with the help of an example. In the previous scenario, where Rs 1 lakh was insured as the base sum, which turns to Rs. 1.5 lakh after five no-claim years. Therefore, if a claim is made in the 6th year, the 10% no- claim bonus is reduced from the new sum insured, and it becomes Rs 1.4 lakh.
You’ve probably guessed that 50% no-claim bonus means 50% bump down when a claim is processed. Therefore, there’s as much pain as gain, so be sure to read the documents related to claim process before investing in a particular health insurance policy. Subsequent claims will decrease the sum insured by the same.
Moreover, if the sum assured is increased, then the two amounts are individually charged. For example, if a person insured Rs. 3 lakhs initially and then increases it to Rs. 2 lakhs, then the no-claim bonuses are calculated separately.
How Does Claiming Work On The Premium?
In some other cases, when the no-claim bonus is not added to the sum assured then the benefit of the same will be effective on the premium. This means that the premium gets reduced by a significant percentage, generally, 5%. One of these plans is implemented depending on the company‘s norms and regulations.
But you don’t need to worry. The base sum insured is not harmed by this decrement of the bonus due to claiming. The sum insured is the limit beyond which decrement is impossible, even on claiming. Moreover, if you do not claim the health insurance in a year, then you regain another no-claim bonus. So, the insured sum amount is not harmed in any case.
What Happens On Changing Health Insurer?
It’s quite a dodgy topic to breach upon. Claiming processes are different for different insurance companies. But, there is a general procedure that is adopted by most companies.
Now, if you’re unhappy with your current health insurance company, you’re likely to shift to another company. There are conditions imposed on the transfers of the accumulated bonus depending on what type of bonus is provided by the new company. For example, for the age of 45 years, the full transfer is allowed, whereas for the age above 45 years only 50% is offered.
Cumulative bonuses or no-claim bonus is beneficial because it provides a higher coverage to the policyholder and hence, provides a higher protection. The beneficial part is that the premium does not rise even if the cover as it is charged on the initial sum insured. This policy does not change even if the health insurance company is changed.
Conclusion: Hence, the claiming of a health insurance does not affect your original sum assured. In today’s world, health insurance policies help you to retrieve your bank account’s plundering due to medical expenses. So, having enough health insurance can also lead you to free treatment! Therefore, do not neglect to own a health insurance policy owing to the difficulties faced during claiming processes. Check the policy terms properly and choose a health insurance policy only after comparing all others.
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The more you understand yourself, the more silence there is, the healthier you are. —Maxime Lagacé