In India, the cost of healthcare is increasing at a rapid pace. Recent studies indicate that the cost of medical treatment in India is rising by about 14 per cent annually.

The rise in infections and lifestyle diseases after the pandemic has really left no room for any doubt regarding the need for a comprehensive health plan.

While it is crucial to shield yourself from unforeseen health issues and the financial shock that comes along, people also look for ways to reap the most benefits out of their plan.

Fortunately, new-age plans are increasingly designed in a way that help customers maximise their safety net along with affordability.

Cumulative bonus

Health insurance coverage in today’s age should be in sync with the rising medical inflation. Often, policyholders wonder about the adequacy of their sum insured. Especially, if they have already made a claim, they can find themselves in a situation where they have to either buy a separate health insurance plan to increase their health cover or buy top-up plans.

Either way, they end up buying a separate policy which may cost more, and would need to be managed separately. So not only would you need to pay more, but also need to keep track of renewal dates of multiple policies to ensure your coverage does not lapse.

Keeping this in mind, insurance companies today offer health insurance plans with a “cumulative bonus” feature wherein policyholders can easily increase their sum insured even if they make a claim during the policy year.

The bonus is typically a percentage of the sum insured and is added to the policyholder’s sum insured during policy renewal each year. This is a useful feature intended to help policyholders to build up a higher sum insured over time, which can provide them with greater financial protection in the event that they do need to make a claim.

For instance, if a policyholder has a sum insured of Rs 10 lakh and earns a cumulative bonus of 10 per cent each year; their sum insured would increase by Rs 1 lakh at the start of the next policy year. For each subsequent year, the bonus would keep adding up to the limit that may be specified in the policy terms.

Most insurance plans allow cumulative bonus to add up to the 100 per cent of the base sum insured. In this example, the cumulative bonus worth Rs 10 lakh could be accumulated, taking the sum insured after 10 years to Rs 20 lakh.

This is different from the usual offering of NCB or no-claims bonus in which the policyholder is eligible for a discount for a claim-free policy year.

Safety net

Depending on the insurer and the plan he chooses, the rate at which the cumulative bonus is added each year could also differ. In fact, there are currently some plans in the market that allow cumulative bonus up to 50 per cent of the sum insured to be added in a single year. This means the total sum insured would double in just two years.

The cumulative bonus feature is mostly offered as part of the base plan by most insurers. This means that one would not have to pay any additional premium to avail this feature and get enhanced protection that it offers. However, lately, certain insurers have introduced additional benefits which are available as add-on riders.

Add-on riders

So essentially, you pay a little extra for getting a super-version of the cumulative bonus in addition to the regular one. For instance, the Care Supreme plan by default offers 50 per cent cumulative bonus for two years.

However, if you opt for the ‘cumulative bonus super’ rider at a little extra cost, the cumulative bonus will increase by 100 per cent of sum insured every year for five years. This is in addition to the default cumulative bonus.

So if we relate this to our earlier example, the base sum insured of Rs 10 lakh would earn cumulative bonus of Rs 5 lakh and a Cumulative Bonus Super of Rs 10 lakh. These would be added to the sum insured of the next year taking the total sum insured to Rs 25 lakh. Next year, the sum insured would increase to Rs 40 lakh.

After two years, however, the cumulative bonus would stop being added but the ‘cumulative bonus super’ would keep adding up for another three years till the total sum insured becomes Rs 70 lakh in five years for a policy which was originally purchased with a sum insured of only Rs 10 lakh.

To add a cherry on top, neither the cumulative bonus nor the cumulative bonus super would be impacted even if the policyholder makes a claim.

The feature makes your plan richer, provides more extensive coverage and essentially rewards you so that you renew your policy and keep yourself protected.

The writer is business head, health insurance, Policybazaar.com

Q&A

Glitch in RTGS

• In case of RTGS transactions, would a remitting customer get back the money if it is not credited to the beneficiary’s account? Is there any time limit for the same?

Brotin Pal, Calcutta

If it is not possible to credit the transaction amount to the beneficiary customer’s account, then the funds have to be returned to the originating bank within one hour or before the end of the RTGS business day, whichever is earlier. Once the money is returned to the remitting bank, the original debit entry in the customer’s account needs to be reversed according to RBI’s directions.

Porting cover

• Is it possible for me to transfer my health insurance coverage from one insurance company to another without losing the renewal benefits?

Debarati Mitra, Calcutta

Effective from October 2011, insurance policies can be ported from one company to another or from one plan to another without losing the renewal credits under the previous policy. However, the credit would be limited to the sum insured under the previous policy and you may check with the insurance company on the available benefits.

Aadhaar address change

• My son has changed his residential address. While his change of address in Aadhaar could be done online, his wife’s change of address was rejected twice due to a ‘technical error’. How do we check what this error’ is?

R.P. Sen, Behala

Without further details on the nature of the error it would be difficult to identify the issue. However, since your objective is to update the address, the same can be done offline at the nearest Aadhaar Enrolment Centre. Refer to the UIDAI website.

If you have any queries about investing or taxes or a high-cost purchase you are planning, mail to: btgraph@abp. in or write to: Business Telegraph, 6 Prafulla Sarkar Street, Calcutta 700001