Zero Cost Term Insurance: Pay as long as you need life cover and get premium back on termination

Insurance – especially life insurance – is the foundation block of any financial plan. This is because all the financial goals would become out of reach once the investments stop due to an untimely demise of the investor or the earning member of a family, unless adequate insurance cover is taken to compensate for the loss.

While there is a variety of life insurance products available in the market – like term life insurance, endowment plans, ULIPs etc – the most affordable one is the term life insurance.

However, there is some reluctance in taking a term insurance plan as there is no maturity benefit payable on survival of the insured person until the end of the insurance period and people often think that it’s a waste of money.

To overcome this mindset, many insurers offer premium back at the end of a policy term on survival of the life assured.

Zero Cost Term Insurance is one of such variants of life insurance plans, where an insured person has the flexibility of discontinuing the policy when he/she feels that no longer there is any liability or any financially dependent member in the family.

The new term category is being categorized as Zero-Cost term plans – besides the Normal term plans and TROP (Term Return of Premium) – and is rapidly picking up in the market. Max Life, Bajaj Allianz and HDFC Life are some of the insurers who have introduced the plan that is intended to benefit customers who are uncertain about their retirement age and wish to invest in a long-term plan.

“One of the key features of the new variant or zero-cost term plan is that it allows policyholders to exit the plan at a specific life stage when they feel that they do not have any liabilities. With this, the policyholder will get their total premium back minus GST. For instance, if you have retired between the age of 60-65 years and do not have any dependent family members, this plan is best suited for you. This means you will not have to pay the premium until the end of your policy term unlike in the case of the existing Term Return of Premium (TROP) plan,” said Sajja Praveen Chowdary, Head – Term Life Insurance,

Here are the features of Zero Cost Term Insurance:

  • Under these plans, the policyholder can discontinue the policy and stop paying premiums at a stage where they don’t have liabilities anymore.
  • After discontinuing, the customer will get back the premiums that they have paid minus GST until then.
  • The premiums for these plans cost the same as normal term plans and are not costlier, like the TROPs.
  • Currently, these plans are offered by Bajaj and Max while other insurers have filed for them and the same is in the pipeline as of now.
  • Data indicates that over 60 percent of policyholders opt for term plans covering them for 70 years of age as they want to ensure their family stays protected in the long term in the event of any uncertainty.
  • The plans are eligible for customers below 45 years of age.


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