Term insurance is a type of life insurance policy that provides coverage for a fixed period. There are different types of term insurance policies that provide different benefits, so it's important to think about what will work best for your family in the future.
Multiple life insurance companies provide a range of term insurance policies and services to meet their customer’s needs. But there are some key differences between different policies that you should know about before you decide on which policy to go with.
In this article, we will explain the difference between zero cost term insurance vs other term insurance plans. Let’s take a look at zero-term insurance and other term insurance plans’ features, benefits, and prices in detail.
What is Term Insurance?
Term life insurance is a type of life insurance that provides coverage for a specified period. It’s typically used to cover the risk of death in the short term. Term life insurance, also known as temporary or limited-term coverage, protects against financial loss due to death for a specified number of years at an agreed-upon cost per year. The policy will expire after the specified number of years and will not provide any further protection if you die during this period.
There are different types of term insurance plans such as
- Level Term Insurance Plan:
- Increasing Term Insurance Plan
- Decreasing Term Insurance Plan
- Return of Premium Term Insurance Plan
- Term Insurance Plan with Riders
Benefits of Term Insurance
- Financial Protection: The main purpose of term insurance is financial protection. If the sudden demise of the insured can put the family in peril. With no regular income, the family may soon face a financial crisis. Having a term insurance policy helps your family come out of any financial crisis after your sudden demise.
- Peace of Mind: Death is unavoidable. In the case of your absence, your family may face financial difficulties so the least you can do for your family is to secure their financial future with a term life insurance policy.
- Low Budget: Term insurance plans are known for providing high insurance coverage at cheap term life insurance online premiums. They help you secure the future of your family with amounts as high as Rs. 10 Crore or more against nominal premium amounts. Life insurance Term plans affordability, makes them a preferred choice.
- Single Platform: The term insurance calculator tool provides to choose the best term plan offered by companies on a single platform easily without switching to different sites.
What is Zero Cost Term Insurance?
Zero Cost Term Insurance is a type of term insurance plan that offers coverage at no cost. This means that you pay the premium for the policy and can exit after a specific tenure mentioned in the policy and can receive the premiums paid back to date. This type of insurance comes at the same premium as that of a regular term plan. Unlike a regular term plan and a return of premium plan, this type of insurance has an exit feature where you can leave the policy anytime and get back what you've put in.
Benefits of Zero Cost Term Insurance
Zero-cost term insurance policy is best suited for those who are not sure how long they will need it. This type of insurance has many benefits and is the cheapest form of life insurance. Some benefits include:
- Affordable Premiums: Zero-cost term insurance plans offer low-cost premiums than other term life insurance policies.
- Coverage for a Specified Period: It offers coverage for a specific period
- Discontinuity: After a certain period, you can discontinue your plan any time when you feel you no more need it.
- Lifelong Cover: If you want long-term coverage and you are not sure about your retirement age, zero cost term insurance policy is for you. However, you need to pay premiums for a long time.
- Refund of Premium: When you surrender your plan, you can request a refund of the plan even if you apply for early cancellation of your policy.
- Regular and return of the Premium Plan: The zero-cost term insurance plan offers the advantages of a regular term plan and the return of the premium plan.
Difference between Zero Cost Term Insurance vs Term Insurance
If you are looking for term insurance, you can go with two options regular term plan or return of premium term insurance plan.
- Regular-Term Plan: In a regular-term insurance plan the insured, pay the premium as long as your coverage lasts. If you die in between, your family or beneficiary will receive the amount of money that was specified in your plan.
- Return of Premium Term Plan: The other option is term insurance return of premium (TROP). Similar to term life insurance, with term insurance return of premium you have the option to get the total amount of premiums paid back if you don't die within a certain period. However, the premium paid back is minus the GST amount. Return of premium plans is twice the cost of regular term insurance plans.
The zero-cost term insurance plan offers the advantages of a regular term plan and the return of the premium plan. Zero cost term life insurance is great for those consumers who would rather not waste their premiums. These policies only require you to pay the original amount and nothing more, as opposed to "return of premium" types.
Under a "zero cost" policy, coverage ends when the insured person opts to surrender the policy and wants a return of premiums. With "return of premium" term policies, however, coverage continues even if all premiums are refunded. The Return of Premium Term Plans is the best possible option for self-employed persons. But if you are an employee, then zero term plans are a fantastic option.
Comparison Table of Zero Cost Term Plan Vs Term Plan
Here’s a comparison table of the Zero Cost Term Plan and the Regular Term Plan:
| Factor |
Zero Cost Term Plan |
Regular Term Plan |
| Premiums |
pay the premium and receive the premiums paid back after completion of the tenure |
Premiums must be paid regularly. There are no premiums paid back |
| Cost |
Offers low-cost premiums |
High cost compared to zero cost term plan |
| Premium Flexibility |
No flexibility in the premium amount |
Can choose a premium amount |
| Death Benefit |
The full death benefit is paid |
The full death benefit is paid |
| Maturity Benefit |
Typically no maturity benefit |
No maturity benefit |
| Investment Component |
No investment component |
No investment component |
| Riders/Add-ons |
Limited or no riders available |
Various riders/add-ons are available |
| Surrender Value |
No surrender value |
No surrender value |
| Policy Term |
Fixed policy term |
Flexible policy term options |
| Tax Benefits |
Eligible for tax benefits |
Eligible for tax benefits |
| Cost-effectiveness |
Maybe cost-effective if you don't lapse the policy |
Generally cost-effective in the long run |
| Risk Coverage |
Provides pure risk coverage |
Provides pure risk coverage |
Premium Comparison of Zero Cost Term Plan Vs Regular Term Plan
Here is an example premium comparison table:
- Age: 30 Years
- Gender: Male
- Tobacco Consumption: No
- Monthly Income: 100000
- Policy Term: 25 Years
- Total Payout: 50 Lakhs
*Above given premiums are just for illustration purposes only* Please compare quotes for the exact premiums.
How to Buy Term Insurance Online
Buy term life insurance online at PolicyBachat with a simple and quick process. For buying a Term life insurance plan, compare term insurance quotes. Following are the steps to buy term insurance.
- Step 1: Enter the details such as Gender, Annual income from all sources, Alcohol consumption and tobacco consumption, Salaries or Self-employed, and Date of Birth. After this, you need to enter your contact details to facilitate a call from our agent.
- Step 2: Now the premium from different insurance companies will be displayed on the screen. You can edit the details such as Coverage, Term, Premium payment method, Mode of claim settlement, etc., and submit the details to get the desired premium. The premium can be changed by changing other factors such as Coverage required, mode of payment, etc.
- Step 3: The next step is to select the best term insurance plan and pay the premium to the insurance company before proceeding to fill out the proposal form details.
Conclusion
It can be difficult to decide which one you should pick when it comes to choosing between zero-cost term insurance vs term insurance. It lies in your circumstances and what you are looking for from your coverage. If you are planning to purchase a term insurance plan, you need to be aware of all the variants of term insurance for a better decision.