Zero Cost Term Insurance

Most people only research life insurance or health insurance when there is a dire need or someone suggests purchasing insurance to safeguard their families and loved ones. India witnesses a lack of awareness when it comes to Insurance as it is a complex process. However, over the past few years, IRDAI has reinforced the way people buy insurance. With cutting-edge technology and emerging insurance aggregators, experienced insurance providers, and a robust insurance agent network every Individual now has access to hassle-free insurance.

Amongst the recent advancements in the insurance sector, there has been a buzz about a new variant of the term life insurance cover which can be zero-cost for you. Most salaried employees think that they are in for a loss when they buy insurance because, the common assumption is that if nothing happens to them during the coverage period, they get nothing in return or gain no monetary benefits. Therefore, the impression of losing their hard-earned money. To fight against this common thought process, zero-cost term plans have come into existence.

So far, only two types of term insurance have been mentioned in the market. One is your plain jane policy where if a person dies during the policy term the nominee gets a lump sum assured. The other is the Return-of-Premium (RoP) term plan wherein if the policyholder survives the policy term he gets back all the premiums he has paid. However, ROP plans are on the costlier end than regular-term insurance.

What is Zero-Cost Term Insurance?

Let’s dive a little deeper and understand what zero-cost term insurance really means. It is going to be a desirable option if you are eager to get a return to the premium. Various insurance providers offer a complete return of premiums paid at a certain age specified by the policymaker. Zero-cost Term Insurance providers also facilitate discontinuation of the plan if you want to.

The newly introduced Zero-Cost Term Plan is basically the best of both worlds as it offers the security of a basic term plan and offers to pay back all the premiums like a return of premium term insurance plan. Moreover, zero-cost term plans offer the paid premiums to the policyholder upon the survival of the policy term and offer much lower tips than Return of Premium Plans.

When it comes to price points, the Return of Premium term plans charge 70% to 100% more than the regular Term Plan premiums, and Zero Cost term plan premiums are about 40% to 50% lower compared to the Return of Premium Term Plan premiums. Zero-cost term insurance will reimburse all of your premium payments if you tell your insurance provider to cancel your plan when you no longer have any responsibilities or when you are approaching retirement; however, they will deduct the GST.

The difference between Zero-Cost Term Insurance and the rest

The zero-cost term insurance policies are aimed at those segments of consumers who do not want to waste their premiums. As the name suggests Zero Cost Term Insurance Policies do not apply any additional premiums, in comparison to "Return of Premium" insurance plans. Regarding Zero Cost Plans, coverage ends when an insured person opts to surrender the policy and wants a return of premiums. Meanwhile, with Return of Premium Term Plans, the insurance coverage continues despite all premium payments being refunded. While the Return of Premium Term Plans is a good option and equipped to cater to the self-employed group, Zero Cost Term Plans are an excellent option for salaried employees.

To understand more about zero-cost term insurance plans we have enlisted a few things to keep in mind before purchasing this variant: