When you stick with your health insurance and don’t make a claim for a while, you might get rewarded for it. That reward often comes in the form of something called a cumulative bonus. If you’ve seen this term in your policy or heard it from your insurer and wondered what it means, you’re in the right place. In this blog, we’ll walk you through what a cumulative bonus in health insurance is, how it works, the different types, the benefits you can get from it, and what changes if you do end up making a claim. This guide is made for Indian policyholders who want to make the most of their health insurance plans.

What is Cumulative Bonus in Health Insurance

A cumulative bonus is an added benefit you get from your health insurance provider when you don’t make any claims during a policy year. Instead of letting that year go by without any gain, your insurer rewards you by increasing your sum insured. This means your overall coverage grows year after year, without you having to pay anything extra.

Some insurers might even reduce your premium, helping you to ease your financial burden.

How Does Cumulative Bonus Work in Health Insurance?

Let’s break it down with a simple example.

Say you have a health insurance plan that covers ₹5 lakhs. It comes with a feature where your sum insured increases by 10% for every year you don’t make a claim, up to a maximum of 50%. So, if you don’t raise a claim in the first year, your cover jumps to ₹5.5 lakhs in the second year. Stay claim-free for five straight years, and your coverage will touch ₹7.5 lakhs.

In some cases, instead of increasing the sum insured, your insurer may give you a discount on the premium. For example, if your yearly premium is ₹10,000 and your insurer offers a 5% discount per claim-free year, you’ll pay ₹9,500 in the second year. Keep this up for five years, and by the sixth year, your premium will come down to ₹7,500. So, whether it’s higher coverage or lower premiums, the cumulative bonus gives you a clear benefit for staying healthy.

Is There a Difference Between Cumulative Bonus and No Claim Bonus?

Not really. The terms are often used interchangeably, especially in health insurance. In motor insurance, a no-claim bonus usually means a discount on your renewal premium for not raising any claims. In health insurance, the idea is similar, but it’s called a cumulative bonus.

Whether your insurer calls it a no-claim bonus or cumulative bonus, the benefit is the same. You either get more coverage or pay a lower premium when you don’t file a claim during your policy period.

Types of Cumulative Bonuses You Should Know

1. Bonus as a Percentage of the Sum Insured

   This is the most common type. Here, your bonus is calculated as a percentage of your current sum insured. Let’s say your coverage is ₹5 lakh and the bonus is 10%. After a claim-free year, your sum insured becomes ₹5.5 lakh. If you keep avoiding claims, this bonus keeps adding up every year.

2. Bonus as a Fixed Amount

   Instead of a percentage, some insurers offer a fixed bonus amount. For example, they might add ₹20,000 or ₹60,000 to your coverage each year you don’t make a claim. This method is simple and works well if you prefer knowing exactly how much extra coverage you’ll get.

3. Bonus Applied at Renewal

   In many policies, the cumulative bonus kicks in only when you renew your policy. So, if you didn’t make any claims this year, the bonus will show up in your next year’s sum insured when you renew the plan.

4. Bonus That Gets Reduced After a Claim

   Not all policies let you keep your bonus forever. If you make a claim, some insurers might reduce your bonus or even reset it. For example, your bonus might be cut in half or removed entirely after just one claim. Still, some companies offer partial reductions instead of wiping it out completely.

5. Family Floater Policy Bonus

   If you have a family floater policy, the bonus applies to the total coverage shared by your family. As long as no one in the family makes a claim, the bonus gets added to the total sum insured. Everyone benefits from it together.

6. Bonus for Staying Claim-Free Over Several Years

   Some insurers take it a step further. If you don’t claim for 2 or 3 years in a row, you may get a larger bonus than someone who was claim-free for just one year. This kind of bonus rewards you for staying healthy over the long term.

Benefits of Cumulative Bonus in Health Insurance

Getting a cumulative bonus can save you money and give you more peace of mind. Here’s how it helps:

• You get rewarded for staying healthy and not making any claims.
• Your policy coverage increases without paying more, or your premium gets reduced.
• It helps you avoid the cost of upgrading your sum insured.
• Some insurers allow this bonus to build up over 10 years, giving you a bigger safety net.
• It can help cover minor medical bills and act as a financial cushion during emergencies.
• It encourages you to stay on top of your health and manage medical costs better.

Things to Keep in Mind About Cumulative Bonus

Here are some simple but important points to remember before choosing a health insurance plan with a cumulative bonus:

• Cumulative bonus is available only with indemnity-based policies, not with fixed benefit plans.
• There is a maximum limit to how much bonus you can earn. Once that cap is reached, your coverage won’t increase further even if you don’t make a claim.
• If you raise a claim, the bonus is either lost or reduced by the same rate at which it was added.
• If you switch your health insurance to a different provider, your cumulative bonus can also be transferred to your new policy.

Always check the terms carefully and ask your insurer about how they handle cumulative bonus and claims.

Frequently Asked Questions (FAQs)

1. What is a cumulative bonus in mediclaim?

   A Mediclaim policy helps cover expenses during medical emergencies like accidents, sudden illness, or surgeries. While it usually offers lower coverage than regular health insurance, both can include a cumulative bonus. This bonus rewards you for claim-free years by increasing your sum insured without raising your premium.

2. What happens to my cumulative bonus if my health insurance lapses?

   If your policy lapses, you may lose your cumulative or no-claim bonus. The bonus only stays active as long as your policy does. Once it lapses, you'll need to start again from scratch. That's why renewing your health insurance on time is really important.

3. What happens if I make a claim after getting cumulative bonuses?

   If you claim earning cumulative bonuses, your bonus will usually reduce by the same rate it was added. For example, if you received a 10% increase in your sum insured for every claim-free year and you made a claim in the fourth year, your sum insured could drop by 10% the following year.

4. How do I use my cumulative bonus in health insurance?

   The cumulative bonus adds to your sum insured for the next policy year. If you’re ever hospitalised or face medical expenses, this bonus helps cover the cost. It reduces how much you need to pay from your own pocket.

5. How is the cumulative bonus calculated?

   Check your policy to find the bonus rate. Usually, the more claim-free years you have, the higher the bonus. Multiply your base sum insured by the bonus percentage to find your new coverage amount.

6. Is there a limit to how much bonus I can get?

   Yes, the insurance company sets a limit when you buy the policy. Some providers offer up to 50% or even 100% bonus. The exact limit depends on the insurer and the type of policy you choose.

7. What if I raise a claim during the policy year?

   In some policies, even if you raise a claim during the year, your cumulative bonus continues to grow. These policies offer Cumulative Bonus Super benefits, which are not affected by claims.

8. What happens to my bonus if I switch to another insurer?

   You can transfer your cumulative bonus to the new insurer, but the terms may be different. If you're 45 or younger, you can transfer the entire bonus. If you’re older than 45, some insurers allow you to carry forward up to 50% of it.

9. What if I forget to renew my policy on time?

   If you miss the renewal deadline, you may lose your entire cumulative bonus. You’ll have to start building it again from the beginning.

10. Can I get a full 100% discount on my premium through a bonus?

    Most insurers don’t offer a full 100% discount. There’s usually a maximum cap on discounts under the cumulative bonus system. The discount is limited by what the insurer allows.

11. How much can the sum insured increase with a cumulative bonus?

    Some insurers offer up to a 100% increase in the sum insured through bonuses. However, each year’s bonus could range from 5% to 50%, depending on the company’s policy.

12. Is the no-claim or cumulative bonus available as an add-on?

    Yes, many insurers offer this as an add-on. It allows you to increase the bonus percentage, either through a higher discount or by raising the sum insured.