Cumulative Bonus (Health)

Cumulative Bonus (CB) — sometimes called No-Claim Bonus on health policies — is an automatic increase in the sum insured at renewal of an indemnity health policy, granted as a reward for not filing claims in the preceding policy year. It is structurally similar to the motor NCB, but mechanically different. Where motor NCB reduces the premium for the next year, health CB usually leaves the premium unchanged but adds to the sum insured — say, 10% to 50% of the base sum insured per claim-free year, capped at a defined ceiling (commonly 100% to 200% of the original sum insured).

Indian retail health policies offer cumulative bonus in three common formats. First, the 'standard' format adds 10% per claim-free year up to a cap of 50% or 100%, with a step-down of the same 10% if a claim is filed. Second, the 'enhanced' format adds 25% to 50% per claim-free year, capped at 100% to 200%, with the cumulative bonus amount sometimes paid as a separate sum-insured layer that does not erode on claim.

Third, the 'super NCB' format adds 100% in the first claim-free year and may continue adding annually thereafter, with the bonus sum insured protected from erosion even on a claim. Worked example: Priti holds a ₹10 lakh family floater with a standard cumulative bonus of 10% per claim-free year, capped at 100%. Year 1 — no claim, sum insured at renewal is ₹11 lakh.

Year 2 — no claim, ₹12 lakh. Years 3 to 10 — no claims, climbing to the ₹20 lakh cap by year 10. Year 11 — the family files a ₹4 lakh claim.

The original sum insured of ₹10 lakh remains ₹10 lakh, but the cumulative bonus drops by 10% — the bonus shrinks from ₹10 lakh to ₹9 lakh, taking the renewal sum insured to ₹19 lakh. Year 12 onwards — claim-free again, the cumulative bonus rebuilds. A common misconception is that 'the cumulative bonus is lost entirely if I file even a small claim'.

Most modern Indian policies use a step-down mechanism (lose only the most recent year's accrual, not the entire stack) rather than a reset-to-zero mechanism. Read the cumulative bonus clause in the policy schedule for the exact treatment. Another common misconception is that cumulative bonus on a family floater is per member.

It is per policy — a single claim by any insured member affects the bonus on the whole policy. For families with one member at higher claim risk, separating that member onto an individual policy can preserve the cumulative bonus stack on the rest of the family. Related: no-claim-bonus, sum-insured, family-floater.