Your health insurance policy is an underrated asset that comes with incredible advantages and saves you from depleting your savings during a medical emergency. While you only have to pay an annual premium, your insurance company covers the high treatment costs. A cumulative bonus is an exceptional benefit you can enjoy when you buy health insurance.

What is Cumulative Bonus in Health Insurance?

In health insurance, a cumulative bonus is a reward or monetary benefit that insurance companies provide you for not filing any claim during a policy year. The concept of cumulative bonus is similar to the No Claims Bonus offered by vehicle insurance providers.

The monetary benefit you get under cumulative bonus may differ from one insurance company to another. For instance, some insurers may offer a discount on your annual premium, while others may charge the same premium but increase your sum insured. Most insurers typically offer a 5% to 50% benefit for each claim–free year. You can amass the maximum benefits in terms of increased sum assured or discounts on premiums for five consecutive claim–free years.

Cumulative Bonus Explained with Examples

Consider the below examples to understand what is cumulative bonus in health insurance and how it works.

• Scenario 1

  Assume you purchased a health insurance policy with a sum insured of Rs. 500,000. As per the policy conditions, the insurer commits to a 10% increment in the sum insured for every claim–free year for up to five consecutive years. Thus, your sum insured increases by Rs 50,000 every year. Here’s what your total sum insured would like at the end of every claim–free year:

  Year	Amount increased (in percentage)	Sum insured after cumulative bonus benefit
  After 1 year	500,000 + 10% = 50,000	Rs. 550,000
  After 2 years	500,000 + 20% = 100,000	Rs. 600,000
  After 3 years	500,000 + 30% = 150,000	Rs. 650,000
  After 4 years	500,000 + 40% = 200,000	Rs. 700,000
  After 5 years	500,000 + 50% = 250,000	Rs. 750,000

• Scenario 2

  Now let us say you decide to buy a health insurance plan wherein you can accumulate the cumulative bonus in the form of discounts on an annual premium of Rs 20,000. As per the policy terms, you can get a 10% discount for every claim–free year with a maximum discount of 50% on the premium for five consecutive claim–free years. Here’s what your premiums would look like.

  Year	Discount on original premium	Annual premium after cumulative bonus benefit
  After 1 year	20,000 – 10%	Rs. 18,000
  After 2 years	20,000 – 20%	Rs. 16,000
  After 3 years	20,000 – 30%	Rs. 14,000
  After 4 years	20,000 – 40%	Rs. 12,000
  After 5 years	20,000 – 50%	Rs. 10,000

Purchasing health insurance plans has never been easier. Today, you can research the various medical policies offered by different insurance companies and buy health insurance plans online. You can also customise your policy with several add–on riders. The insurer sends you soft copies of the policy document, and you can file claims for treatment up to the sum insured.