A health insurance policy document is a fairly complex agreement, very carefully worded by the insurance companies to completely define the claimable amounts and situations. This results in users not usually going through the full document or understanding the clauses. To simplify, this, most sales documents will clarify some of the major clauses that affect the claims payable, so that buying insurance is less intimidating for you. In separate articles we have explained features like Co-pay and Sub-limits. Here are the other terms which you should be aware of when buying or evaluating health insurance policies:
- No Claim Bonus or Cumulative Bonus – In case no claim is made during the policy period, the insurance company will ‘Reward’ the insured with the no claim bonus. Usually, this would be adjusted against the premium paid for the renewal of next years’ policy. This benefit is transferable ie. In case you chose a different company next year to issue your policy, this no claim bonus can still be claimed. Sometimes, the insurance company may increase the sum assured portion next year, instead of reducing the premium in case of no claim. This is called a cumulative bonus.
- Top–up Insurance – A top-up is an additional coverage when you have an existing plan. This is to cover for medical expenses in case they exceed the sum assured in the primary policy. These policies kick-in after an initial amount (typically the sum assured in the primary policy) is exhausted. Top-up policies are cheaper than increasing the sum assured in the existing policy. For eg, if you have a policy with Sum assured of Rs 5 lakhs, and increasing this to Rs 10 lakhs will cost Rs 6,000 additionally in premium, taking a top-up policy of Rs 5 lakhs will cost around Rs 2,000/-. Both primary policy and the top-up plan can be claimed together for single hospitalisation.
Read our Health Insurance primer and learn more about Samarth's Health Insurance services here.