Zero cost term insurance

The features of zero-cost term plans are highlighted below:

• It provides coverage for specific policy tenure.
• The policyholders can get life coverage until 99 years of age.
• It provides the benefits of both the regular term plan and the return of the premium plan.
• Zero-cost term insurance is more economical in comparison to the return of premium plans.
• This plan is ideal for individuals who want the return of premiums paid by them. Additionally, this plan is suitable for salaried employees who want to stop paying premiums after a certain period of time.
• A premium paid against the zero-cost term plan is eligible for tax exemption up to Rs. 1.5 lakhs under the old tax regime.

Zero-cost term plans are designed to provide numerous benefits to policyholders. Some of these benefits include:

• High Coverage: A zero-cost term insurance plan provides high coverage to policyholders. With this high sum assured, you can ensure that your family is protected against financial contingencies that may arise in the future.
• Tax Benefits: The policyholders of zero-cost term plans can avail of tax benefits on a premium paid under Section 80C of the Income Tax Act, 1961. Additionally, a death benefit paid to the nominee is also tax-deductible under Section 10(10D) of the Income Tax Act, 1961.
• Lifelong Coverage: You can financially secure your retirement by renewing your zero-cost term plans for a lifetime. However, if you want to enjoy lifetime financial protection, you may have to pay a premium for a long-time.
• Return of Premium Benefit: Generally, term insurance plans do not return premiums paid by the policyholder in case of the termination of the policy. But, zero-cost term insurance plans provide this benefit. In simple terms, if the insured cancels their plan within the policy tenure, he or she can claim the return of premiums paid until that date.

It is crucial to compare different zero-term insurance plans at the time of purchase. Here’s a list of some factors that you need to consider while purchasing zero-cost term plans.

• Insurance Provider: Many term insurance companies in India provides zero-term insurance coverage for the policyholders. Therefore, compare different insurance companies on the basis of claim settlement ratio and select the one that has the highest ratio.
• Riders: Riders are additional benefits provided by a term insurance company. The policyholders can buy riders like the premium of waiver rider, critical illness benefit rider, and others to enhance the coverage of their term insurance plan. However, the policyholder may have to pay an additional premium to include riders in their base term life insurance policy.
• Sum Assured: Zero-cost term insurance plans may limit the sum assured amount. Therefore, it is important to determine the required sum assured based on your financial liabilities and other day-to-day expenses. Select the sum assured that provides enough coverage that can suffice the future financial needs of your loved ones.
• Premium: The policyholders of the zero-cost term plan may have to pay service tax, education cess, and other charges in addition to a premium. Therefore, it is substantially important to read the policy document and check all the terms and conditions carefully. Additionally, check the premium payment options provided by a term insurance company.
• Policy Tenure: It is a period for which an insurance company is entitled to provide life coverage to the policyholder. Therefore, it is important to select the policy tenure that aligns with your financial needs. Additionally, it is recommended that you purchase a term plan that provides a lifetime renewal option.

In conclusion, zero-cost term insurance plans are term plans that provide a return of premium benefits to the policyholders. A premium paid for zero-cost term plans is similar to a premium paid for regular term insurance plans.