Zero Cost Term Insurance Plans
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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.
Term Insurance Plans: Get Zero Cost Insurance
| Insurance Providers | Best Term Plans | Claim Settlement Ratio (CSR) | Entry Age | Sum Assured | Check Plans |
| Max Life Insurance | Max Life Smart Secure Plus | 99.34% | 18 to 65 years | 50k to 1 Crore | |
| Bajaj Allianz Life Insurance | Bajaj Allianz E-Touch | 99.02% | 18 to 65 years | 50 Lakh to No Limit | |
| HDFC Life Insurance | HDFC Click 2 Protect Super | 98.66% | 18 to 84 years | 5k to no limit | |
| ICICI Prudential life insurance | ICICI Prudential iProtect Smart | 97.82% | 18 to 65 years | N/A | |
| Canara HSBC Life Insurance | Canara HSBC iSelect Smart 360 | 98.44% | 18 to 65 years | 5 L to 2 Crore |
Any company that sells an insurance policy is the insurance provider. A good insurance provider has a high CSR, solvency ratio, good customer reviews, a vast product portfolio, and transparency towards its customers.
A good term plan consists of various coverage options, flexibility to choose death payout, flexibility in premium payment terms, offers premium discounts, lets you add riders, comes with loaded inbuilt benefits, and is easy on your pocket.
Claim Settlement Ratio is the percentage of claims settled by an insurer compared to the total claims received in a financial year. A good CSR lies somewhere between 95 to 99 percent.
The age (last birthday) at which you buy an insurance policy is your entry age to that policy. Insurance policies usually come with a minimum and maximum age at entry which means that you must attain a specific age or should be less than the maximum age to buy a policy.
Sum assured is the total amount which will be given to your nominee as death payout after your demise.
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 term insurance companies who are selling zero-cost term insurance such as Max Life Insurance, Bajaj Life Insurance, HDFC Life Insurance, and ICICI Life Insurance.
Zero Cost Term Insurance offers a plethora of benefits to insurance holders that are mentioned below
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
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.
Here we have listed the eligibility criteria that you have to fulfill to buy the following zero cost term plans in India:
| Parameters | Max Life Smart Secure Plus | Bajaj Allianz E-Touch | HDFC Click 2 Protect Super | ICICI Prudential iProtect Smart | Canara HSBC iSelect Smart 360 |
|---|---|---|---|---|---|
| Entry Age | 18 - 60 years | 18 - 45 years | 18 - 65 years | 18 - 65 years | 18 - 65 years |
| Min. Policy Term (Zero-Cost) | 40 years | 35 years or more | 36 years | 25 Years | 25 Years |
| When Can You Exit The Policy? | 25th/30th policy year | Available during 3 policy years immediately after you attain Age 60 | Exit after 30 years but not during the last 5 policy years | Any year greater than 25 but not during the last 5 policy years | 25th policy year |
| Sum Assured | 50k to 1 Crore | 50 Lakh to No Limit | 5k to no limit | N/A | 5 L to 2 Crore |
| Claim Settlement Ratio | 99.51% | 99.04% | 99.31% | 97.90% | 98.44% |
We have listed below some insurance providers offering zero-cost term insurance to insurance holders with various features and benefits
Below mentioned are the steps to follow in order to purchase a zero-cost term insurance plan
Given below are the list of documents required to purchase a zero-cost term insurance plan.
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.
No, zero-cost term insurance plans do not allow customers to exit the policy at any given point in the policy period. You can avail of the special exit feature only after a certain amount of years mentioned during the purchase of the policy. Individuals can exit the policy on the basis of terms and conditions laid down by the insurance providers which varies from insurer to insurer.
There are multiple insurance providers that offer zero-cost term insurance plans, such as Bajaj Allianz, HDFC Life Insurance, ICICI Prudential, Max Life Insurance, and more.
No, the major difference lies in the fact that in a return of premium plan, the insured individual will receive all the premiums once the policy term concludes and not before that. Whereas in a zero-cost term insurance policy, you can forego the policy after a specific policy term period depending on the policy and insurance provider selected. Return of premium plan premiums is generally more expensive than zero-cost term plans wherein you don’t have to pay extra in order to avail of a zero-cost term insurance plan.
No, not all insurance providers have designed a zero-cost term insurance plan. However, a large number of insurance companies have started offering this particular variant of plan.
Yes, tax benefits are applicable on premiums paid towards the zero-cost term insurance plans under the Income Tax Act.
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