Page 192 - IC38 GENERAL INSURANCE

As per IRDAI guidelines, cumulative bonus can be provided only on indemnity
based health insurance policies and not benefit policies (except PA policies).
The operation of cumulative bonus should be stated explicitly in the prospectus
and the policy document. Moreover, if a claim is made in any particular year,
the cumulative bonus accrued can only be reduced at the same rate at which it
is accrued.

Example

A person takes a policy for Rs. 3 lacs at a premium of Rs. 5,000. In the second
year, in case of no claims in the first year, he gets a sum insured of Rs. 3.15 lacs
(5% more than the previous year) at the same premium of Rs. 5,000. This could
go up to Rs. 4.5 lacs over a ten year claim free renewal.

12. Malus/ Bonus

Just as there is an incentive to keep the health policy free of claims, the
opposite is called a malus. Here, if the claims under a policy are very high, a
malus or loading of premium is collected at renewal.

Keeping in view that health policy is a social benefit policy, so far malus is not
charged on individual health policies.

However, in case of group policies, the malus is charged by way of loading the
overall premium suitably to keep the claim ratio within reasonable limits. On
the other hand if experience is good a discount in premium rate is allowed
which is turned as Bonus.

13. No claim discount

Some products provide for a discount on premium for every claim free year
instead of a bonus on sum insured.

14. Co-payment

Co-payment is the concept of the insured bearing a portion of each and every
claim under a health policy. These could be compulsory or voluntary depending
on the product. Co-payment brings in a certain discipline among the insured to
avoid unnecessary hospitalizations.

Some products in the market have co-payment clauses in respect of certain
diseases only, such as major surgeries, or commonly occurring surgeries, or for
persons above a certain age.

15.Deductible / Excess

Also called as excess, in health policies, it is the fixed amount of money the
insured is required to pay initially before the claim is paid by insurer, for e.g. if

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