Zero-cost term insurance: How is the new variant different from the traditional term plan? Details here

The zero-cost term policies are aimed at the segment of customers who fear that if nothing unfortunate happens, they would be wasting the premiums paid for regular term insurance, according to industry experts. If the policyholder chooses the exit option in these plans, they become zero-cost plans for them.

Zero-cost term insurance: How is the new variant different from the traditional term plan?

Details here

Most of us are only aware of just one type of term insurance plan – Pure term plans and of course they come with various tenures in terms of coverage of the policyholder. As we all know that in pure term plans, there is no maturity benefit if the policyholder survives the policy term. But if the insured person dies during the policy tenure, the nominee gets the sum assured.

Most people don’t like the fact that term plans don’t give them maturity benefits for the survival of policyholders. Given this reluctance by people, insurance companies have come out with a new format of term insurance – zero-cost term insurance. Zero-cost plans allow the insured to discontinue at a specified point and receive all the premiums paid until then. However, this facility is available for 20 & 30-year-term plans.

Regular term plan vs zero-cost plan

Under a regular term plan, if the insured person dies during the tenure of the policy, his or her beneficiary will get the full death benefit. No maturity amount is paid if the policyholder survives the policy term. There is another variant which is a return of premium term plan, where the policyholder gets back all the premiums he has paid if he survives the policy term and if he has paid all the premiums regularly.