Understanding Cumulative Bonus and how it works!
Most of the time, insurance related terms can intimidate naïve policyholders. While health insurance is an imperative investment, it is equally important to understand it completely, to enjoy the maximum benefits. Often, policyholders ask, what is a cumulative bonus in health insurance? Cumulative bonus in health insurance is one of the most critical and cumbersome features that every policyholder must know to enjoy a level of benefits that t brings in.
What is a cumulative bonus in health insurance?
In simple words, a cumulative bonus in health insurance is a benefit that the insurer offers to an insurance holder, in case they do not claim any cover in an existing year. This means that every claim fee year earns you a benefit which can be in any form, related to the policy. The health insurance provider companies either offer an increase in the sum insured or a discount on the premium payable or a combination of both options as a cumulative bonus in health insurance.
Usually, a cumulative bonus is paid as a 5% increase in the cover. However, if you have a claim-free third year, you can expect another 5% increase in the base of the sum insured.
Similarly, the policy providers might offer a discount on the premium amount, which means you have to pay a lesser premium for the same cover.
Maximum cumulative bonus offered:
There are no fixed or year-wise slabs for the cumulative bonus. However, in general, the maximum cumulative bonus in health insurance given is 50% recorded till date.
The effects of a claim in any of the years:
In case you avail a claim in any of the years, you might have to bear a considerable impact as the policy-insurer often cancels the cumulative bonus benefit and the sum insured comes down to the original amount. In case of bonuses offered as a cumulative bonus, you may have to pay the original premium only. These rules differ from company to company and might be lenient as well.
What happens in case I avail the portability feature?
In case you have accumulated a bonus in your existing policy and considering switching to some other health insurance provider, the accumulated bonus gets transferred as well. However, the transfer depends on the type of bonus the new company offers.
Depending upon the insurer to insurer, there might be some condition imposed on the transfer of bonus benefit including an age limit for the transfer, bonus amount transfer limitation and more.
Important facts to know about the cumulative bonus in health insurance in India:
• In most of the cases, insurer offer cumulative bonus in the range of 5-10%
• It is a transferrable feature which can be ported to another health insurance provider.
• In case of non-payment of premium and expiration because of the same, the accumulated cumulative bonus also expires.
• If you have accumulated cumulative bonus in a policy and are making multiple claims later, the cumulative bonus, as well as the available sum insured, is taken into account.
Hope this makes you understand what is a cumulative bonus in health insurance.