No-claim bonus (NCB) in health insurance rewards policyholders for not making claims by increasing their sum insured at renewal — without raising the premium. Over multiple claim-free years, NCB can significantly increase effective coverage. Understanding exactly how NCB accumulates, what happens when a claim is filed, and how NCB protect add-ons work helps you evaluate plans and protect accumulated benefits.
How NCB Works: The Basic Mechanism
At each renewal, the insurer checks whether any claims were filed in the expiring policy year. If no claims were made:
- SI increase model: The sum insured for the next year is increased by a fixed percentage of the base SI (e.g., 10% per year)
- Premium discount model: The renewal premium is reduced by a fixed percentage (e.g., 5–10%)
The SI increase model is more common and more beneficial — you get more coverage for the same premium rather than a small cost saving.
Example: SI increase NCB over 5 years
| Year | Base SI | NCB Accumulated | Effective SI |
|---|---|---|---|
| Year 1 | ₹10 lakh | 0% | ₹10 lakh |
| Year 2 (no claim) | ₹10 lakh | 10% | ₹11 lakh |
| Year 3 (no claim) | ₹10 lakh | 20% | ₹12 lakh |
| Year 4 (no claim) | ₹10 lakh | 30% | ₹13 lakh |
| Year 5 (no claim) | ₹10 lakh | 40% | ₹14 lakh |
| Year 6 (no claim) | ₹10 lakh | 50% (max) | ₹15 lakh |
After 5 claim-free years, the effective SI has increased by ₹5 lakh at no additional premium. This is a meaningful benefit for healthy younger policyholders.
NCB Reset: The Critical Clause
The most important NCB clause to check is what happens after a claim. Two common structures:
Reset to Zero
After any claim in a year, all accumulated NCB is erased. Next year’s SI reverts to the base SI. Common in most standard plans.
Impact: 5 years of accumulated NCB (₹5 lakh in the example above) disappears after one claim year. The policyholder must rebuild from scratch.
Reduction Model
NCB reduces by a fixed percentage per claim year rather than resetting entirely.
Example (HDFC Ergo reduction model):
- Year 6: NCB at 50%, effective SI = ₹15 lakh
- Year 6 claim filed
- Year 7: NCB reduces to 40%, effective SI = ₹14 lakh (not ₹10 lakh)
The reduction model is significantly more policyholder-friendly for long-term policyholders with accumulated NCB. When comparing plans, the NCB reset clause is a meaningful differentiator.
NCB Protect Add-On
NCB protect (offered as an add-on by several insurers) prevents NCB from resetting or reducing after a claim. With NCB protect:
- You make a claim in Year 4 (accumulated NCB: 30%)
- Year 5: NCB remains at 30% despite the claim
- Without NCB protect: NCB resets to 0% (or reduces by 10–20% depending on the insurer)
Is NCB protect worth buying?
The answer depends on the claim probability and the accumulated NCB value:
| Scenario | NCB Protect Worth It? |
|---|---|
| Early in policy (Years 1–2), low accumulated NCB | Probably not — low benefit to protect |
| Mid-policy (Years 3–5), meaningful NCB accumulated | Worth evaluating — compare add-on cost to NCB value |
| Above 50, higher claim probability | Consider — claim probability rises but so does NCB value |
| Chronic condition | Less relevant — claims likely to occur frequently anyway |
Calculate: NCB add-on cost × 3 years vs expected NCB loss from a single claim scenario. If the numbers justify it, buy it.
Booster Benefit vs NCB: Key Differences
Niva Bupa ReAssure 2.0’s Booster Benefit is structurally different from standard NCB:
| Feature | Standard NCB (10%/year) | Niva Bupa Booster |
|---|---|---|
| What accumulates | % of base SI per year | Unused SI rolls over |
| Maximum accumulation | 50% of base SI (typical) | 100% of base SI |
| After a claim | Reset to 0 or reduce | Reduces by claim amount |
| Year 2 on ₹10L, no claim | ₹11 lakh effective SI | ₹20 lakh effective SI |
| Year 2 on ₹10L, ₹5L claim | ₹10 lakh (reset) or ₹9L (reduction) | ₹15 lakh (₹20L minus ₹5L claimed) |
Booster Benefit compounds faster for healthy policyholders and is more resilient after claims. The trade-off is Niva Bupa’s lower CSR (91.1% vs HDFC Ergo’s 98.4% in FY24) — a meaningful consideration.
Checking NCB in Your Policy Document
To find the NCB clause in your policy:
- Look in the Schedule of Benefits for a row labelled “No Claim Bonus” or “Cumulative Bonus”
- Check the Policy Terms for the definition of how NCB is calculated and the reset/reduction mechanism
- Verify the maximum NCB cap — typically 50% but varies (some plans offer 100%)
- If you have an NCB protect add-on, confirm it is listed in your schedule and the conditions under which it applies
Disclaimer: PolicyJack is an independent research platform. We do not sell insurance, receive commissions, or have commercial relationships with any insurer.