Published: updated on – 13:02, Sat – 20 Aug 22
Hyderabad: Term insurance is the cheapest and most effective investment channel that provides financial protection to a family. However, there are many who feel that there is no real need or benefit for them personally. In a step that will encourage these fence keepers to consider a term insurance policy, insurance companies are now offering zero-cost term insurance policies that refund premiums paid if policyholders terminate the policy at some stage. ulterior.
“Some policyholders may feel like they no longer need a term insurance policy because they have no liabilities. This is mostly around the retirement phase. At this point, they can exit the zero-cost term insurance policies and recoup the premiums paid,” said Sajja Praveen Chowdary, term life insurance manager, Policybazaar.com.
Two companies MaxLife and Bajaj now offer these term insurance policies at no cost. Two or three other companies are in preparation to launch their products soon. Gradually, all insurers will offer this feature, he says.
Under the regular plan, a policyholder continues to pay the premium until the term of the policy. The sum insured is paid to the named persons in the event of the death of the insured persons. If they survive the term or if they withdraw, they do not collect the bonuses. There is also a variation called Term Premium Refund (TROP). These refund the premiums paid if the insured survive the term of the policy. The response for these has not been high as the premium is almost double the regular term policy.
MaxLife offers zero-cost term insurance at Rs 1,283 per month for a 30-year-old non-smoking salaried person (male) with a sum insured of Rs one crore. The same person, if he were to opt for a premium return policy, it will cost him Rs 1,973 per month for the same sum insured. For the regular policy, the premium is fixed at Rs 999 per month. Bajaj is offering the zero-cost premium for Rs 1,102 per month. The premium term refund is Rs 1,496 per month while the regular term policy is priced at Rs 816 per month. Coverage is up to age 60 for regular and return of premium policies. It is 75 years for the no-cost term insurance. Authorized exit points vary by policy.
Zero-cost term insurance policies have the best of both because the premiums aren’t as high as TOO and offer policyholders the option to discontinue after a certain period and recoup the premiums paid (minus GST).