Health insurance no claim bonus: you get to choose

You finished a policy year without a claim and your insurer rewards you for it. What almost nobody is told is that the shape of the reward is not the insurer's call. IRDAI requires your choice or express consent, at every renewal, on whether it arrives as extra sum insured or as a discount on your premium. Most insurers just pick one and print it on the renewal notice.

The circular joins them with “and/or”, so a product may offer both.

Anita renews a family floater on 1 September 2026. Sum insured ₹10,00,000, premium ₹24,000, one clean year behind her. Her schedule states the bonus rate as 10 percent. IRDAI does not fix that rate; her insurer filed it, and yours will differ.

1. Cumulative bonus. Cover rises by ₹1,00,000 to ₹11,00,000. She still pays ₹24,000.
2. Premium discount. She pays ₹21,600 instead of ₹24,000 and saves ₹2,400. Cover stays ₹10,00,000.

The ₹2,400 is certain, and hers on renewal day. The extra ₹1,00,000 is worth nothing unless a bill climbs past ₹10,00,000, and worth a great deal on the day one does. If a parent above 60 is on the floater, take the cover. If the premium is stretching the month, take the discount. Either way, put it in writing.

It sits in the Master Circular on Health Insurance Business, Ref IRDAI/HLT/CIR/PRO/84/5/2024, dated 29 May 2024, issued under section 14(2)(e) of the IRDAI Act 1999 and section 34 of the Insurance Act, 1938, read with Regulation 7 of Schedule III of the IRDAI (Insurance Products) Regulations 2024. Paragraph 14:

Three words carry it. Choice. Consent. And every renewal, so this is not something you set once at purchase. Note the first word too. May. Running a bonus at all is the insurer's decision. Once it offers one, the form is yours.

Item 2.19.3 of Form IRDAI-HIP, the filing form attached to the circular, repeats it. The insurer must answer “Whether No Claim Bonus (NCB) is allowed on Renewal, if yes the Choice for NCB shall be with the Policyholder”, and must state its own rate of cover increase and rate of discount. Checked on irdai.gov.in on 6 August 2026, Version 1 of 29 May 2024 is still the operative text.

Three things readers expect in the circular are not in it: the rate, since no percentage per claim free year is prescribed; the ceiling, since no maximum is prescribed; and what a claim does to the bonus you have already banked.

All three are policy terms now. The instrument many websites still quote, IRDAI/HLT/REG/CIR/152/06/2020 dated 11 June 2020 on General Terms and Clauses in Health Insurance Policy Contracts, is superseded by this Master Circular, at item 20 of Annexure 6. So when a page says the regulator caps your bonus, ask which live circular says so.

A claim cannot by itself cost you your renewal. Paragraph 10(b): “An Insurer shall not deny the renewal on the ground that the policyholder had made a claim (s) in the preceding policy years.” A bonus cut after a claim can be lawful, but only if your own wording says so. Make the insurer quote the clause.

1. Renew inside the grace period. Paragraph 8 gives 15 days where premium is monthly, 30 days where it is quarterly, half yearly or annual. Renew inside it and “all the credits (sum insured, No Claim Bonus, Specific Waiting periods …) accrued under the policy shall be protected”. Miss it and the policy lapses, credits and all.
2. Changing product, same insurer. Paragraph 11 carries the credits, No Claim Bonus included, into the migrated policy.
3. Changing insurers. Paragraph 12(d) entitles you “to transfer the credits gained to the extent of the Sum Insured, No Claim Bonus … from the Existing Insurer to the Acquiring Insurer”. The old insurer gets “not more than 72 hours” to release your details through the Insurance Information Bureau portal at https://iib.gov.in, the new one “not more than 5 days” to decide. Read the new schedule the moment it arrives and raise a missing bonus at once.

1. Write to the grievance redressal officer. Ask which form of NCB was applied at your last renewal, and where your consent is recorded. Cite paragraph 14. Under paragraph 19 the reply must carry the Ombudsman contact details for your jurisdiction.
2. Escalate on Bima Bharosa. IRDAI runs the portal at https://bimabharosa.irdai.gov.in, which says a registered complaint “will be attended to within 14 days”. The IRDAI Grievance Call Centre is 155255 or 1800 4254 732, email [email protected].
3. Then the Insurance Ombudsman. Free, no lawyer needed. Under Rule 14(3) of the Insurance Ombudsman Rules, 2017, a complaint lies only after a written representation to the insurer that was rejected, drew no reply in a month, or did not satisfy you. File within a year at https://www.cioins.co.in.

A choice never put to you is inside the Ombudsman's remit. Rule 13(1)(i) covers “non-observance of or non-adherence to” any circular or instruction issued by the Authority or the terms of the policy contract, and Rule 13(1)© covers “disputes over premium paid or payable in terms of insurance policy”. The award is due within three months, binds the insurer, and must be honoured in 30 days. If the insurer ignores it, paragraph 20 adds “a penalty of Rs. 5000/- per day shall be payable to the complainant”.

The Right to Information Act, 2005 binds a “public authority” under section 2(h). A private insurance company is not one, and an RTI to it does not lie. Against the insurer your route is the grievance officer, then Bima Bharosa, then the Ombudsman.

IRDAI is different. It is a statutory authority, it runs an RTI page at https://irdai.gov.in/rti, and it names Central Public Information Officers department by department, including one for Health and one for Policyholder Protection and Grievance Redressal. A section 6(1) application there fits complaint-handling questions: how many grievances of a type were logged against a named insurer, or what was done with your complaint token. Reply is due in 30 days under section 7(1), and silence is a deemed refusal you appeal under section 19(1). Ask for what IRDAI holds, not a rival company's filings, which meet section 8(1)(d). Draft it with the AI RTI Drafter, check the wording in the RTI Act, 2005, and build the appeal with the First Appeal Builder.

No. Paragraph 14 of the Master Circular of 29 May 2024 says the bonus “shall be paid as per the choice/ express consent of the policyholder”, at every renewal. If the renewal notice just announces a higher cover or a lower premium, ask in writing where your consent was recorded.

No. The Master Circular prescribes no percentage and no ceiling. The insurer states its rate of cover increase and rate of discount in the filing form and prints them in your schedule. Two policies from one insurer can carry different rates, so read your own schedule.

The Master Circular does not say, so the answer lives in your policy wording. Some products cut accrued bonus after a claim, others do not. Ask for the exact clause and figure applied. What the insurer cannot do is refuse renewal because you claimed, which paragraph 10(b) forbids.

Not if you port properly. Paragraph 12(d) entitles you to transfer credits including No Claim Bonus to the acquiring insurer. The old insurer gets 72 hours to release your details through the Insurance Information Bureau portal, the new insurer 5 days to decide.

Not if you paid inside the grace period, 15 days for monthly premium and 30 days for quarterly, half yearly or annual. Paragraph 8 protects all accrued credits, sum insured and No Claim Bonus included, on renewal inside that window. Past it the policy lapses and takes them.

It costs nothing and beats going to court. Complain to the insurer first, then approach the Ombudsman within one year. Compensation cannot exceed the loss you actually suffered, and cannot exceed ₹50 lakh including expenses, a ceiling raised by G.S.R. 828 dated 9 November 2023. The award binds the insurer.

• IRDAI Master Circular on Health Insurance Business, IRDAI/HLT/CIR/PRO/84/5/2024, 29 May 2024
• IRDAI circulars list
• Annexure to the Master Circular, Form IRDAI-HIP and the repeal list
• Insurance Ombudsman Rules, 2017, as amended till 9 November 2023
• Bima Bharosa grievance portal
• Council for Insurance Ombudsmen
• IRDAI Right to Information page
• RTI Act, 2005, amended text

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