Cumulative Bonus
Cumulative bonus in health insurance is a reward for not making any claims in a policy year. For each claim-free year, the insurer increases your sum insured by a specified percentage without increasing your premium. This bonus accumulates over multiple claim-free years, significantly boosting your health coverage over time.
What Is Cumulative Bonus?
A cumulative bonus (also called a no-claim bonus in health insurance) increases your sum insured each year you do not file a claim. For example, if your policy offers a 10% cumulative bonus per claim-free year and your sum insured is Rs 5 lakh, after one claim-free year your effective coverage becomes Rs 5.5 lakh. After two years, Rs 6 lakh, and so on.
Most policies cap the cumulative bonus at 50% or 100% of the base sum insured.
How Cumulative Bonus Works
**Policy sum insured:** Rs 5 lakh
**Cumulative bonus:** 10% per claim-free year, capped at 50%
| Year | Effective Coverage |
|——|——————|
| Year 1 (no claim) | Rs 5.5 lakh |
| Year 2 (no claim) | Rs 6 lakh |
| Year 3 (no claim) | Rs 6.5 lakh |
| Year 4 (claim filed) | Rs 6.5 lakh (no addition this year) |
| Year 5 (no claim) | Rs 7 lakh |
Some plans reduce the bonus if a claim is made. Others maintain the bonus but do not add to it in a claim year.
Cumulative Bonus vs No-Claim Discount
– **Cumulative bonus** – sum insured increases on claim-free years (you get more coverage)
– **No-claim discount** – premium reduces on claim-free years (you pay less)
Different insurers offer one or both features. The cumulative bonus is more valuable if you want long-term coverage enhancement.
What Happens to Cumulative Bonus on Policy Porting?
IRDAI’s portability guidelines require the new insurer to credit the cumulative bonus you have earned when you switch policies. This means you do not lose the bonus accumulated from previous years of claim-free behaviour.
Practical Example
Mohan has a Rs 5 lakh health policy that offers a 10% cumulative bonus per claim-free year, capped at 50%. He has no claims for 5 consecutive years. His effective sum insured grows to Rs 7.5 lakh (Rs 5 lakh + 50% bonus), all without paying any additional premium. When he finally makes a claim in year 6, the bonus does not reduce but stops growing for that year.
Key Takeaways
– Cumulative bonus increases your sum insured for each claim-free year at no extra premium
– Most policies cap the cumulative bonus at 50% to 100% of the base sum insured
– Some insurers reduce the bonus if you file a claim; others only freeze the growth
– Cumulative bonus is transferred to the new insurer when you port your policy
– Over many claim-free years, cumulative bonus can significantly increase your total health coverage
