Zero Cost Term Insurance

Zero Cost term insurance is a new kind of term insurance benefit that offers insurance holders the liberty to exit the term insurance at a particular time along with allowing them to take their premium amount paid to the insurer back. Zero Cost term insurance promises insurance holders the return of their premiums at a fixed date. In layman's terms, you can purchase term insurance at the standard market premium rates, pay the premiums for a set number of years and forgo the policy, and have all your premiums returned to you. 

However, there is an important catch under the Zero Cost Term Insurance benefit wherein it offers premium payments back after the GST deductions, which may vary as per tax laws and the insurer. When opting for a zero-cost term insurance benefit, customers can not opt for the return of premium option. You can opt only for one of the two benefits when purchasing a plan.

Difference Between Term Insurance & Zero Cost Term Insurance 

Term Insurance is a simple and pure protection cover wherein the insurance holder pays the premiums to the insurance providers and gets a life cover. If the insured individual dies, the nominated individual gets the term insurance benefit, which is the assured death benefit to continue a comfortable lifestyle. Term insurance is simple and straightforward. 

However, a zero-cost term insurance plan has a unique feature wherein insurance holders can exit their term insurance plan and get the return of their premiums. Zero-cost term plan also offers multiple rider options that insurance holders can select. The zero-cost term insurance policy usually has a long policy term of 35-40 years. There are various companies who are selling zero-cost term insurance such as Max Life Insurance, Bajaj Life Insurance, HDFC Life Insurance, and ICICI Life Insurance.

Benefits Of Zero Cost Term Insurance

Zero Cost Term Insurance offers a plethora of benefits to insurance holders that are mentioned below

Factors To Consider Before Purchasing Zero Cost Term Insurance

There are a few factors that must be considered before purchasing a zero-cost term insurance plan in order to realize its full potential and benefits

How Does Zero Cost Term Insurance Work?

Let us understand the zero-cost term insurance plan with an example

Rakesh, a 40-year-old living with his wife and 10-year-old daughter has borrowed a housing loan worth INR 50 Lakhs. To ensure his family’s financial stability in case of his demise, Mr. Rakesh avails zero-cost term insurance policy with a policy term of 30 years. The family will receive a sum assured of INR 70 Lakhs in case he passes away. After 15 years Mr. Rakesh’s daughter starts earning and is financially independent. After Mr. Rakesh got good investment returns he paid off his housing loan and realized he does not need the term cover anymore. With the help of a zero-cost term insurance plan that he invested in, Mr. Rakesh now opts to exit the policy and receives the premiums he paid towards the policy back.

Best Zero Cost Term Insurance Plan

We have listed below some insurance providers offering zero-cost term insurance to insurance holders with various features and benefits

Process To Purchase Zero Cost Term Insurance 

Below mentioned are the steps to follow in order to purchase a zero-cost term insurance plan 

• Estimate and assess your needs 
• Visit the official website of an insurance company 
• Select a suitable plan as per your requirements 
• Opt for an adequate amount of Sum Assured 
• Apply for the Policy selected 

Documents Required to Purchase Zero-Cost Term Insurance

In order to purchase a zero-cost term insurance policy, customers must produce the following documents

• Identity Proof 
• Adhhar Card (Identity Proof) 
• Income Proof 
• Medical Reports 

Conclusion

Zero-cost term insurance is an exceptional tool for individuals who want to offer coverage to their loved ones but also require the flexibility to exit the policy in case they do not require it anymore. It is an apt tool for salaried individuals as they can receive their premiums back and also exit the policy after fulfilling their financial goals. However, individuals must keep in mind that zero cost term insurance plan does not allow you to exit the policy whenever you want, you still have to serve a certain amount of policy period before availing the smart exit option offered by these plans.