The decision to choose a suitable health insurance product should not be based solely on low premiums. Waiting period on pre-existing diseases, general waiting period, room rent restrictions, sub-limits, permanent exclusions and many such features need to be evaluated to make the befitting choice.
One such feature is cumulative bonus in a health policy. It is a reward which the insurance company offers for every year in which you do not make a claim. This bonus comes in the form of a hike in your health cover, i.e., the base sum assured, for every claim-free year, subject to a maximum limit. In most health insurance policies, the cumulative bonus accrues at a fixed rate of 5-15 per cent of the sum assured for every claim free year. So, for example, suppose your base cover is Rs.5 lakh, and as per policy conditions, you are entitled to a 10 per cent bonus for every claim free year subject to a maximum of 100 per cent of the sum assured. So, your cover will double to Rs.10 lakh over 10 years, provided there is no claim.
A few products offer a 50 per cent cumulative bonus for every claim free year, subject to maximum of 100 per cent of the sum assured, or even 150 per cent.
Cumulative bonus can be helpful to take care of rising healthcare inflation over the long run. It is a useful feature to enhance your health cover without paying additional premium and can be considered as an important factor while choosing the policy.
Key things to note about cumulative bonus:
- In the event of a claim in any year, there is no cumulative bonus awarded and hence there is no hike in sum assured that year. Presently, there are many policies which also deduct the cumulative bonus by the rate at which it was accrued if a claim is made.
- For cumulative bonus awarded every year, there is a fresh waiting period applicable to the extent of the enhanced cover. So, for example, you were awarded a cumulative bonus of say 20 per cent on base cover of Rs.5 lakh, which comes to Rs.1 lakh. This Rs.1 lakh has let’s say a general waiting period of 2-3 years. So, you cannot use this Rs.1 lakh in the event of any claim during the waiting period.
There are many variations in conditions on cumulative bonus offered by different insurers. Hence, it is important to read the fine print before signing up.