The idea behind the formulation of Term Insurance plans is to offer financial independence to the entire family in the event of the ill-timed demise of an insured individual. It covers you for the long term, while the premiums are available at reasonable rates. One of its variations is a zero-cost term plan. In this, a nominee is eligible to receive the sum assured on the unfortunate death of the policyholder. Nevertheless, this term plan comes with a special exit feature. An insured person retains the right to surrender the policy before or post-retirement and obtain all the premiums disbursed against the base cover before the policy reaches its expiration date. Zero-cost term insurance schemes typically entail a prolonged policy term that ranges from 35 to 40 years.
Zero-cost term insurance is a fairly new classification of term plans in which the policyholder enjoys the option of exiting the term plan at a specific age and receives all the premium amount expended, after excluding the Goods and Services Tax (GST).
Zero-cost term insurance plans are a combination of pure term plans and term returns of premium plans (TROPs). Term insurance presents financial coverage to the insured person for a specific time, which generally varies from 30 to 40 years.
When it comes to a zero-cost term insurance plan, an individual can discontinue the plan if they feel that the requirement of a life cover is over. When compared to pure term plans, the premium charge for a zero-cost term insurance plan is a bit expensive.
This type of insurance policy provides a financial safety net at affordable rates for the policyholders if they survive their life insurance term. Insured individuals get financial security with Zero-cost term insurance without spending a lot.
Zero-cost term insurance policies are designed in such a way that a policyholder will get additional funds at retirement as the premiums will be returned if an insured person does not file a claim on the policy and outlive the policy term.
Zero-cost term insurance plans can be recycled as an investment tool, as the money that is returned to the policyholder/nominee can be reinvested to generate a stable influx of income post-retirement. Such plans help you get peace of mind.
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