Ever increasing medical treatment bills it become important to have health insurance policy. Insurance companies have always incentive health policies with certain benefits such as No claim bonus or cumulative bonus and restoration of sum insured.
No claim bonus
In health insurance policy every claim free year or no claim during one year; insurance company will reward their customers with No claim bonus or Cumulative bonus.
Most insurance company will give certain percentage as bonus without increasing premium on base sum insured. So if a No claim bonus/ cumulative bonus of 10% is given in health policy, the sum insured will increase by 10% every free claim year.
For example Sum insured is INR 10 lakhs with 10% No claim bonus, then every free claim year sum insured will increase to INR 11 lakhs, then every year it will go on increasing by 10% till there is no claim.
However there is a cap on how much your sum insured can increase. Insurance company may have cap on No claim bonus/ Cumulative bonus up to 100% of sum insured or 50% of sum insured.
When there is a claim in any given year, cumulative bonus/ No claim bonus benefits acts as extra cushion of sum insured. For eg if customer have base sum insured of Rs. 10 lakh with Rs. 5 lakh cumulative bonus/ No claim bonus then his total sum insured will Rs. 15 lakhs; a health claim of Rs. 8 lakhs customer will still have balance of Rs. 7 lakh sum insured for that policy year.
Hence the benefits of No claim bonus/ cumulative bonus in health insurance policy is extra or increased sum insured benefit. There are certain conditions to have benefits of No claim bonus which is policy should be continuously renewed without any break. The benefits will not have any effects on terms & conditions of health insurance policy.
RESTORE BENEFITS
In a health insurance policy when sum insured is exhausted due health claim within policy year, insurance company will replenishes the sum insured in the policy. This benefit is also known as Auto Restore, Refill, Reinstatement, etc.
This benefit will triggers only when the entire sum insured is exhausted, in some policies it will triggers even on partial exhaustion of sum insured. There are some health policies which will offer unlimited restoration benefits.
What are the types of restoration benefits?
There are mainly two types of restoration benefits. They are complete exhaustion and partial exhaustion. Insurers will offer full restoration benefits once, specified times (say 3 times a year) and unlimited options depending on the policy.
Complete exhaustion: Under this, restoration benefit will kick in only if entire sum insured is exhausted. This type of benefit is offered by most health insurers. In most cases, premiums for the complete exhaustion option are also affordable. It is also a good back-up for medical emergencies.
Partial exhaustion: This option offers flexibility for the insured. Partial exhaustion can be activated even if the sum insured is still left unused.
Let understand with an example
Insured with an SI of Rs 10 lakhs, make a claim of Rs. 5 lakh in a single policy year. After the claim is settled, the sum insured is restored; as the policy allows for partial utilization of the sum insured triggering the restoration. In other case if full sum insured is claimed then the restoration will trigger and sum insured will be restore after claim is settled.
Restoration benefits Conditions
- The unutilized restored sum insured cannot be carried forward to the next policy year in health insurance policy.
- Insured can use the restoration benefit at a time
- Multiple family members cannot use it at the same time
- Insured can use the restored benefits for the same illness only after a gap of 45 days
No claim bonus/ cumulative bonus and restoration benefits are good features in health insurance policy; it should be taken as an additional benefit only. It is recommended to have adequate sum insured in health insurance policy and consider both features as bonus or withdrawable benefits.