Definition
Cumulative Bonus
Cumulative bonus is the accumulating increase in a health policy's sum insured granted for each consecutive claim-free year.
Each claim-free year adds a set percentage to the base sum insured, accumulating up to a cap (some plans allow the cover to multiply substantially over several claim-free years). The enhanced cover is provided at no additional premium, helping the policyholder keep pace with rising medical costs.
The bonus typically reduces if a claim is filed, unless the plan offers a 'bonus protect' feature. Cumulative bonus differs from restoration, which refills exhausted cover within a year, and from a premium-discount style no-claim bonus.
Related terms
- Restoration BenefitRestoration (or recharge) benefit automatically reinstates the health policy's sum insured once it is exhausted during a policy year, providing fresh cover for further claims.
- No-Claim Bonus (Health)A health no-claim bonus rewards a claim-free policy year by increasing the sum insured at no extra premium, or by giving a premium discount.
Plain-English explainer from The Dispatch Investors Encyclopedia. General information, not financial advice.