Before purchasing any Health Insurance Policy it is advisable that you study the policy in detail. Read and understand the meaning of all the fine print clauses, including the insurance company’s policy regarding – no-claim benefit and Loading before signing the dotted line. If you have no clue as to what is no-claim benefit and loading all about, the article below offers you an explanation of these concepts to help you get complete benefit of your mediclaim.
No claims benefits
No claims benefit means if you do not make a mediclaim in a particular year, your insurance company will provide you discount in subsequent premiums. Some health insurance service providers also increase the sum assured if there is a claim-free year.
Mentioned below are some salient features of no claims benefits
Under the no claims discount (NCD) policy, health insurance service providers offer a discount on the basic health insurance Premium in the range of 5-25% for a Claim free year.
Moreover, some other health insurance providers may offer to increase the Sum Assured by as much as 50% as a no claim benefit and if you do not ask for the claim in the subsequent year the company may offer to double the sum assured as your no claim bonus.
So if you stay healthy in a particular year you may find some solace with this policy clause as it rewards you for taking good care of your health.
While the no-claim benefit sounds interesting and attractive, it can also become a head-scratching issue for people who have incurred minor medical costs and are not able to decide whether they should forego the claims in lieu of the No-claim benefit that the insurance will offer at the end of the year.
In such a case, a financially rational decision can be made only after considering the no-claim benefit vis-a-vis the cost of loading. Thus the concept of no-claim benefit is also kind of a disincentive provided by Insurer to the people to make smaller claims or in other words, it is an incentive to settle small claims yourself, which in some ways defeats the concept of health insurance.
All about loading
Through loading, your health insurance provider charges you for making mediclaims in a particular year by increasing your renewal health insurance premium, just like the way they offer you a discount for not making a claim. How loading will be calculated varies with insurance companies.
Some insurance companies increase the cost of the premium for every year you make a mediclaim.
Your health insurance may penalize you with loading on the basis of the amount you claimed during a year.
The amount of loading you may have to face may also depend on the claim ratio.
Some companies may give you a jolt by putting loading on Pre-existing diseases or on your age.
In addition, some cheap health insurance companies have a vague loading clause through which they may increase your renewal health insurance premium by up to 100% in case of adverse claim experience. You must clearly stay away from such cheap health insurance providers.
Though insurance companies may justify loading, critics are against this policy as they feel that the policy nullifies the whole concept for which people buy health insurance. If the loading is excessive, people may refrain from taking a policy and this will be harmful to customers as well as insurance providers.
Expert’s advice consumers to understand a company’s policy regarding loading as well as no claims benefits before they make a decision to buy any particular policy.