Term insurance doesn’t provide coverage in case you outlive the term. Some people might find this lack of coverage to be a big problem and not buy it for that reason. However, understanding the requirements of the customer, life insurers offer zero cost term insurance policy to overcome the problem.
What is Zero Cost Term Insurance?
Zero Cost Term Insurance Plan is a type of term life insurance that offers coverage at no cost. This means that you pay the premium for the policy and can exit after a specific tenure mentioned in the policy and can receive the premiums paid back to date. This type of insurance comes at the same premium as that of a regular term plan. Unlike a regular term plan and a return of premium plan, this type of insurance has an exit feature where you can leave the policy anytime and get back what you've put in.
Types of Term Insurance Plans
Below are the different types of term insurance policies.
Level Term Insurance Plan:
Level term insurance plan is a plan where the sum assured remains constant throughout the term of the policy period and the benefits are paid to the nominee on the death of the policyholder. In the level term insurance policies the sum assured selected by the policyholder at the inception of the policy will remain constant throughout the policy term and in case the policyholder intends to increase or decrease the sum assured, he/she would be required to purchase a new term insurance policy.
Level-term insurance plans are the most common type of term insurance plans available in India. These term insurance plans have the same sum assured and premium amount throughout the policy period thereby making them unsuitable for longer terms. Some companies might provide an option to change the level of term insurance plans to another type of term insurance plan based on satisfactory underwriting.
Increasing Term Insurance Plan:
Increasing term insurance is a type of term insurance policy in which the sum assured of the policy increases with the completion of each year. The sum assured in the second year would be greater than that of the first year and so on up to a certain limit mentioned under the policy. The premium under the increasing term insurance policies would remain constant throughout the policy period whereas the sum assured keeps on increasing at a certain percentage.
The percentage of the sum assured to be increased each year can be chosen by the policyholder at the time of taking the policy. Normally the percentage ranges from 5% to 15% depending on the insurance company. The premium also changes depending on the slab selected by the policyholder. The higher the percentage, the higher would be the premium to be paid under the increasing term insurance policy.
Decreasing Term Insurance Plan:
Decreasing term insurance plan is the type of term insurance plan in which the sum assured under the policy would be decreasing with each passing year. The percentage to be decreased under the plans can be pre-defined and the sum assured decreases every year until either the policy pays out or the coverage period comes to an end.
The decreasing term life insurance policy’s premium would remain constant throughout the policy term whereas the sum assured decreases till the end of the policy term. The percentage of decrease under the decreasing term insurance policy depends on the option selected or a certain percentage until the policy is paid out.
Return of Premium Term Insurance Plan:
The Return of premium term life insurance plan is the plan where the premiums paid by the policyholder under the term insurance plan will be returned by the life insurance company to the policyholder in case the policyholder survives the policy period. In case of death during the policy period, the nominee would receive the sum assured as mentioned in the policy copy.
This kind of policy has been brought into the Indian market after thinking about the mindset of the Indian people. Most of us think that the premium paid under the term insurance plan would be wasted if we outlive the policy period and thereby paying the premium would be of no use. So to counter this mindset the insurance companies have introduced the life insurance return policy which returns the entire premium if the policyholder survives and settles the sum assured to the nominee if the policyholder expires during the policy period.
Difference between Zero Cost Term Insurance and Other Term Insurance Plans
If you are looking for term insurance, you can go with two options regular term plan or return of premium term insurance plan. In a regular-term insurance plan the insured, pay the premium as long as your coverage lasts. If you die in between, your family or beneficiary will receive the amount of money that was specified in your plan.
The other option is term insurance return of premium (TROP). Similar to term life insurance, with term insurance return of premium you have the option to get the total amount of premiums paid back if you don't die within a certain period. However, some plans may come with a high initial premium on top of what an average insurance plan would be, but the long-term premiums may be lower.
Zero cost term life insurance is great for those consumers who would rather not waste their premiums. These policies only require you to pay the original amount and nothing more, as opposed to "return of premium" types.
Under a "zero cost" policy, coverage ends when the insured person opts to surrender the policy and wants a return of premiums. With "return of premium" term policies, however, coverage continues even if all premiums are refunded. The Return of Premium Term Plans is the best possible option for self-employed persons. But if you are an employee, then zero term plans are a fantastic option.
Reasons to Buy Zero Cost Term Insurance
There are many reasons why you should buy Zero term insurance policy, and they are outlined below:
- You will have peace of mind knowing that your family won't have to worry about the financial burden if you die during the term period.
- Fewer premiums than the return of premium term insurance plan
- Option to continue the plan till the end or to exit the plan and request the premiums back
- If you are in good health, then it's better than paying monthly premiums for life insurance when you may not need it at all.
- You can choose how long your term policy lasts so it can fit your needs and budget.
- Zero cost term policy is the best option for salaried employees
- Well suited for customers who are not sure about retirement age.
Best Zero Cost Term Insurance Plans
||Premium per Month
|Canara HSBC OBC Life Insurance
||Canara HSBC iSelect Smart360
||5 years to 99 years – entry age
|HDFC Life Insurance
||HDFC Click 2 Protect Plan
||5 years to 85 years – entry age
|Max Life Insurance
||Max Life Smart Secure Plus Plan
||10 to 67 years
|Bajaj Allianz Life Insurance
||Bajaj Allianz e-Touch Plan
||10 to 67 years
*Above given premiums are just for illustration purposes only* Please visit our website for the exact premium values.
How to Buy Zero Cost Term Insurance Plans?
The process of buying zero cost term plans online has become simple with PolicyBachat. For buying a term insurance plan online please visit our website Policybachat.com Following are steps to compare term insurance quotes online.
- Visit the PolicyBachat Website and select the ‘Term tab.
- Enter your Name, Date of Birth, and Mobile Number.
- Click on the ‘View Plans’ button.
- Just Answer 5 Simple Questions.
- Select your ‘Gender’.
- Select ‘YES’ or ‘No’ if you have Smoked or Chewed Tobacco in the last 12 months.
- Select your ‘Annual Income’.
- Select your ‘Education Qualification’.
- Choose your ‘Occupation Type’.
- Enter your ‘Email Address.
- Then click on ‘Start Saving Money.
- Premium Quotes of top-term insurance plans will be displayed as per data entered by you and which suits your requirement.
- You can edit policy details, sum insured value, and policy terms and you can choose your preferred company.
- Purchase the best term insurance policy using online payment.
Documents Required to Buy Zero Cost Term Insurance
Below are a few important documents that are required to opt for a zero-cost term insurance policy
- Income Proof
- Identity Proof
- Medical Report
- Residence Proof
One of the most important decisions you will make for your family is choosing a term life insurance plan. Whether you should purchase the new category of term plans called the zero-cost insurance plan will depend entirely on your financial goals. So when selecting a term life insurance plan, compare all your options and choose the best zero cost term insurance India that fits your needs and budget.