Zero-cost term insurance is a relatively new category of term plans in which the policyholder has the option to exit the term plan at a certain age and get back all the premium amount paid, after excluding the Goods and Services Tax (GST).
Zero-cost term insurance plans are a mix of pure term plans and term returns of premium plans (TROPs). Term insurance is a life insurance product, which offers financial coverage to the policyholder for a specific time, which is generally 30-40 years. In the eventuality of the death of the insured individual during the policy term, the death benefit is paid by the insurance company to the family. However, in this case, no payback is offered if an insurer outlives the policy term.
On the other hand, TROPs are a variation to the regular term plans in which a death benefit as well as an additional assurance that all premiums will be returned to the insurer after the policy term.
In the case of a zero-cost term insurance plan, an individual has the option to discontinue the plan if they feel that a life cover is no longer required.
The premium charge in the case of a zero-cost term insurance plan is on the higher side as compared to pure term plans. Also, currently, this particular facility is available on quite long-term plans.
Having said that, before opting for any insurance product, an individual should ensure to compare premiums, features, customer services, and claim-settlement ratio.
Rajiv is an independent editorial consultant for the last decade. Prior to this, he worked as a full-time journalist associated with various prominent print media houses. In his spare time, he loves to paint on canvas.