A Detailed Guide on Why Should You Opt for Zero-Cost Term Insurance?


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Zero-cost term insurance is a policy that allows the insured to get back the premium amount paid during the course of the term if he/she outlives the policy. Read on to know the plan in detail, in this post.

What do you mean by a Zero Cost Term Insurance?

So, zero-cost term insurance plan is a new plan variant introduced recently. This plan allows the policyholder to exit from the plan at a particular period and also allow him/her the option to get the premium money back that is paid by the insured during the policy term.

As we know, there are two types of term insurance plans. One is the standard plan that covers the insured and allows the nominee of the insured to avail death benefit in the event of death of the policyholder during the policy tenure. In this case, the policy offers no maturity benefit. On the other hand, there are some term life insurance plans like the Return of Premium (ROP) plans that allows the insured to receive a maturity amount in case the person outlives the policy term. However, the premiums of such plans are expensive as compared to the normal term plans.

There is a third category of term plans being introduced by insurers lately and are known as zero-cost term insurance plans. These plans, which are available at almost the same premium price like the normal term plans, allow insured the special facility of exiting the plan at a specific time and get their premium money back.

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Is a Zero-Cost Term Insurance similar to a regular Term Insurance plan?

A zero-cost term insurance is also a term plan and hence the basic features of the two plans remain the same. Like the normal term plans, the zero-cost term policy also offers death benefit in the event of demise of the policyholder during the policy term.

The only unique feature that distinguishes a term plan against a zero-cost term policy is that the latter allows return of the premium to the policyholder along with an exit option at a particular time of the plan. Further, the plan also allows various rider benefits which can be availed to enhance the policy.

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Who Introduced the Idea of Zero-Cost Term Insurance in India?

There are many insurers In India who are offering the zero-cost term insurance plans including Max Life Insurance who is said to be the pioneer behind the zero-cost term insurance plans.

These plans were introduced to make more and more people buy term plans without the worry of losing money in case they outlive the plan

Another insurer, Bajaj Allianz insurance company, is also offering the zero-cost term policies to its customers.

Let’s take a look at some zero-cost plans to understand why you should opt for them.

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Best Zero-Cost Term Insurance Plans

Plan Name  Benefits 
Max Life Smart Secure Plus Plan Death benefit

Terminal illness

Benefit of Exit value

Additional coverage is available with extra charges, such as;

Premium breaks

Joint life cover

Additional payout on accidental death, etc.



Bajaj Allianz eTouch Term Plan Death benefit

Terminal illness cover

Disability cover

Flexible premium payment

Premium holiday Option that allows insured to skip premiums for three years

Additional accident payout

Choice of death benefit as a lump sum amount or to be paid in monthly instalments.

The Max Life Smart Secure Plus Plan is a zero-cost term plan offering the option of total return of premium. The plan covers both the insured and his/her family under individual and family floater plans.

Similarly, the Bajaj Allianz eTouch Term Plan is another zero-cost term policy that ensures total return of premiums. This plan serves well as a non-participating individual term plan. It allows early exit to the policyholder to get out of the policy before it expires with the premiums paid.

This policy is available in 3 different categories:

  • Life Shield
  • Life Shield Plus
  • Life Shield ROP

However, the plan comes with certain limitations regarding early exit value. So, the insured cannot get the paid premium back if:

  • They buy the policy at the age of 50 or early
  • If the policy term is beyond 35 years
  • If the age of the insured at time of policy maturity is 68 or beyond
  • If you have already raised a claim under the same plan

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To Sum Up

A Zero-Cost term insurance is a complete plan with features like a wide range of coverages, rider benefits, and everything else that a term plan generally offers. In addition, it also offers the return of premium, which makes it an effective policy. So, it is worthwhile if you could invest in such a policy. Further, you can use a term insurance premium calculator to evaluate the money you are likely to receive in case of plan exit as compared to what you pay as premiums.

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FAQs: Why Should You Opt for Zero-Cost Term Insurance?

What advantages do Zero Cost Term Plans offer?

The zero-cost term plan offers a special exit feature. The policyholder can surrender the plan before or after retirement to get back the entire premium amount paid back. 

Which companies offer zero cost term plans?

HDFC Life insurance, Max Life, Bajaj Allianz life etc, are some of the insurance companies which offer zero cost term plans.

Can I exit zero cost term insurance at any time?

No, you cannot exit zero cost term insurance at any time. The policyholder can exit the plan only after the specific number of years mentioned in the policy.

What is a zero-cost term insurance plan?

A zero-cost term insurance plan is one of the best term insurance plans that allow refund of the premium paid in case the insured outlives the policy term. However, the premiums paid under these policies might be higher as compared to normal term plans. 

Why is zero cost term insurance plan worth it?

A zero-cost term insurance plan suits people who can afford to pay higher premiums as it offers the benefit of a refund of premium.  

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Feb 22, 2023
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PayBima Team
PayBima is an Indian insurance aggregator on a mission to make insurance simple for people. PayBima is the Digital arm of the already established and trusted Mahindra Insurance Brokers Ltd., a reputed name in the insurance broking industry with 17 years of experience. PayBima promises you the easy-to-access online platform to buy insurance policies, and also extend their unrelented assistance with all your policy related queries and services.

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