As individuals are increasingly looking at term life insurance cover, a few insurers are launching zero-cost term insurance. In such a plan, the individual pays the premium for the policy and can even surrender the policy after a specific period and get back the premiums paid, excluding the GST. However, the individual cannot exit in the early part of the tenure and the conditions for exits varies among insurance companies.
Pure term plans provide financial protection to one’s family as the benefit amount is paid out to the nominee in case of death of the person insured. In case the insured survives the entire tenure of the policy, he does not receive any maturity amount. In another variant of a term called return of the premium, the insured gets back the entire premium if he survives the policy tenure and in case he dies, the nominee gets the sum assured. In the third variant, zero-cost term plan, the insured can exit the plan after a defined tenure and get back the premium paid before maturity.
Insurance companies charge a higher premium for a zero-cost term insurance as compared to a pure term plan or return of the premium plan. In fact, a pure term plan is the cheapest form of life insurance and helps in ensuring financial protection for the family. Ensure that the sum assured is at least 10 times of your annual income.
Before buying a term plan, do a proper assessment of the liabilities and future expenses and go for the sum assured which can help the family to meet expenses and repay debts in case of your premature death. In case the insured does not have liabilities at any point of time during the tenure of a term plan, he can exit the policy. On the other hand, in the other two plans, the insured will have to either continue till the maturity or can exit towards the last phase of the tenure.