Term insurance with 100% refund of premium at NO COST is a new variant of term insurance plans in which the policyholder has the option to exit the term plan at a certain age and get all the premium amount back that he/she has paid minus the GST. Simply put, a 100% refund of premium term plan comes at the cost of a regular term plan (No extra costs) and provides the flexibility of exiting the plan early (if the policyholder wishes to) and getting a refund of all the premium they had paid. All this can be done at no extra cost.
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There were 2 types of term insurance plans available in the insurance industry so far. One is a regular term plan also referred to as a “term plan” where if an individual dies during the policy tenure, his/her nominee will receive the life cover amount (Sum assured). And, if they survive the policy term, no maturity amount is paid. The second variant of the term plan is Return of Premium (ROP) in which the policyholder gets back their premium amount minus GST in case of survival till the end of the policy term. However, the Return of Premium(ROP) plans are slightly more expensive than Regular term plans.
While term plans are the most affordable type of Life Insurance across the world, it has been seen that there are still people who don’t understand the need for term insurance for themselves and, end up not buying one. This can be either, due to the sense of not getting back any benefit in case of Survival, or feeling that the Return of Premium (ROP) plans are costly. At the same time, it has been seen that most of the customers preferred to take a cover for longer policy term/age due to uncertainty of their retirement age and financial dependency of family members post 60/65 years of age. To cater to this segment of the audience, insurers are now offering a new type of term insurance plan which is commonly referred to as Term insurance with 100% refund of premium at NO COST.
"This plan comes at the same premium as the regular term plan. It has a special exit feature where you can exit at a specific life stage and get all your premiums back whenever you want, during the time period provided by the insurer. So, you get the flexibility of getting a refund of your paid premium amount at the same cost which otherwise might have cost you twice."
Term Plans
Let’s understand this with the help of an example:
| Details | Description |
| Policyholder | 30-year-old male (Non-smoker) |
| Life Cover | ₹1 Crore |
| Policy Term | Up to 75 years |
| Monthly Premium | ₹1,150 (excluding GST) |
| Total Premium Paid (by Age 60) | ₹4,34,874 (excluding GST) |
| Surrender at Age 60 | Full return of premium: ₹4,34,874 |
In this scenario:
A 30-year-old non-smoker purchases a term insurance plan with a life cover of ₹1 crore until age 75.
He pays a monthly premium of ₹1,150 (excluding GST), which totals ₹4,34,874 over the years until he reaches 60.
If he decides to exit the plan early at the age of 60, he gets back the total premium paid, which is ₹4,34,874.
Note: The refund amount may be taxable as per the prevailing tax laws.
A 100% Refund of Premium at No Cost Term Insurance plan offers the following features:
Premium Refund at Exit: When you choose to exit the policy, all the premiums you’ve paid throughout the term are returned to you, minus any applicable taxes. This special exit value feature ensures you don’t lose the money you’ve paid towards the policy.
High Life Coverage: With no cost term insurance, your family is protected with a large life cover, such as ₹1 crore or more. This ensures they can maintain their standard of living and cover any major expenses if something happens to you.
Death Benefit: In case of the policyholder's death during the policy term, the insurance company provides a lump sum amount to the nominee. This payout offers financial stability and security to your loved ones during difficult times.
Flexible Term Options: You have the flexibility to choose the coverage duration and amount according to your needs and future goals. Whether you want coverage for 10, 20, or more years, it’s tailored to fit your financial situation.
Riders Available: To make your plan more comprehensive, you can add optional riders, like critical illness or accidental death benefits. These riders provide extra protection and help cover additional risks for more complete coverage.
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Cost-Effective: This type of life insurance offers you a large life cover at an affordable cost. You can secure your family's future without straining your current budget.
Flexibility: You have the freedom to customize the policy based on your financial needs. Whether it’s the coverage amount, term duration, or how often you want to pay the premium, the policy adjusts to your lifestyle.
Ideal for Salaried Individuals: For those with limited disposable income, this plan is designed to provide strong financial protection. It allows you to safeguard your family's future without putting too much pressure on your finances.
Tax Savings: With the free of cost term insurance plans you can also claim term insurance tax benefits. Premiums paid under this policy qualify for tax deductions under Section 80C, and the death benefit your family receives is tax-exempt under Section 10(10D).
Peace of Mind: With this policy, you can rest assured that your loved ones will be financially secure even if something happens to you. Plus, you get the added comfort of knowing you can exit the plan early and get your premiums refunded.
Limited Coverage: The special exit value feature might lower the coverage amount compared to traditional term plans.
No Maturity Benefit: The zero-cost term insurance plan offers no return on investment or additional benefits if the policyholder survives the term.
Strict Exit Conditions: Special exit value feature may have specific conditions or penalties, and the refund is limited to premiums paid, excluding taxes.
No Investment Component: This zero-cost term insurance does not include an investment feature, unlike plans like ULIPs, which offer returns on investments.
Inflation Impact: The refunded amount may not account for inflation, reducing the value of the refund over time.
In both ROP and no-cost term plans, you get back/have the option to get back your total premium paid until the end of the policy. To help you understand the two plans better, let us discuss the difference between these two term plan variants:
| Term Insurance with 100% Refund of Premium at NO COST | Term Return of Premium Plan (TROP) |
| 100% refund of premium plans are less expensive than ROP | Return of Premium (ROP) term insurance plans charges a 70-80% higher amount of premium than a regular term insurance plan |
| You have the option to choose if you wish to exit the plan early with the special exit value and get the premiums refunded or to continue the plan as it is till the end of the policy term | Your cover will continue till the end of policy term on premiums being paid and the return of premiums will happen at the end of policy term only. You can’t exit in between and get all the premiums back. |
| Suitable for salaried class individuals | Suitable for self-employed individuals |
Term Plans
Financial advisors always suggest opting for the plain-vanilla term plan. You can buy a term insurance plan with life cover online having low-cost till 70 years of age to meet your insurance needs. Let’s say, at 55 years you have met all your financial responsibilities or have accumulated sufficient funds to meet them, then you can think of discontinuing the term insurance plan by opting for 100% refund of premium at no-cost term insurance plan.
Here are a few reasons you should buy the 100% refund of premium at no cost term plan:
These plans are more affordable for customers in comparison to Return of Premium (ROP) plans. Generally, no-cost term plans are about 50% cheaper than ROP plans.
These free of cost term plans are suited for customers who are not sure of their retirement age or dependency of family members on their income at an older age.
Before selecting the best no cost term insurance plan, you need to understand what is term insurance. Let’s discuss the details:
| Name of the Insurer | 100% Refund of Premiums at No-cost Term Plans | Claims Settled Amount (Cr.) | Entry Age | Maturity Age |
| Bajaj Allianz Life Insurance Company | Bajaj Allianz e-Touch Plan | 603 | 18- 55 years | 99 years |
| Bandhan Life Insurance Limited | Bandhan Life iTerm Prime | 86 | 18-65 years | 70 years |
| HDFC Life Insurance Company Limited | HDFC Click 2 Protect Super | 1,389 | 18- 65 years | 85 years |
| ICICI Prudential Life Insurance Company Limited | ICICI Pru iProtect Smart Term Plan | 1,950 | 18-65 years | 75 years |
| Max Life Insurance Company Limited | Max Life Smart Total Elite Protection | 1,242 | 18 - 65 years | 85 years |
| Tata AIA Life Insurance Comoany Limited | Tata AIA Maha Raksha Supreme Select | 776 | 18-65 years | 100 years |
*Disclaimer: The list of insurers mentioned are arranged according to the alphabetical order of the name of insurance company respectively. Policybazaar does not endorse, rate or recommend any particular insurer or insurance product offered by any insurer. The list of plans listed here comprise of insurance products offered by all the insurance partners of Policybazaar. For complete list of insurers in India refer to the Insurance Regulatory and Development Authority of India website www.irdai.gov.in
When people reach a specific age, they would have generally accumulated different assets and may not feel the need for term insurance plans. As discussed, various insurers have addressed this need by allowing them to exit the plan at a pre-specified age and get their total premium paid back. It is advisable to buy best term plan after thorough research, comparison, and as per your suitability.
Things to Consider Before Buying a No Cost Term Insurance Plan
Here is a list of factors to consider before buying a no cost term insurance plan:
Understanding the Policy:
Make sure to read and understand all the terms, conditions, and coverage details, including what happens with the special exit value and when the zero cost term insurance matures.
Coverage Amount:
Assess how much coverage your family would need if something happens to you. Choose a sum assured that ensures their financial well-being.
Premium Payment:
Even though zero cost term insurance doesn’t require premium payments, check for any hidden fees or charges that might be part of the plan.
Policy Term:
Ensure the policy term matches your future financial obligations and provides protection for the time you need it most.
Riders:
Look into available riders like critical illness or accidental death benefits to enhance your coverage based on your specific needs.
Insurance Company:
Choose a reputable insurer with a good claims settlement history and strong financial stability for peace of mind.
Documents Required to Buy a 100% Refund of Premium at No Cost Term Plan
The list of documents required to buy a zero cost term insurance or 100% refund of premium term plan are as follows:
Identity Proof (Aadhaar Card, Voter ID, PAN Card, etc.)
Address Proof (Driver’s License, Aadhaar, Driving License, etc.)
Income Proof (Salary Slips, bank statements, or copy of filed Income Tax Return)
Medical reports (if asked by the insurer)
Age Proof
Recent passport-sized coloured photograph(s)
How to Buy a No Cost Term Insurance Plan from Policybazaar?
Here is how you can buy a no cost or zero cost term insurance plan from Policybazaar:
Step 1: Visit the term insurance page of Policybazaar
Step 2: Fill in the required details like name, gender, and contact number
Step 3: Select the right occupation type, smoking habit, educational qualifications, and annual income
Step 4: Choose the best zero cost term insurance policy and proceed to pay
†Policybazaar does not endorse, rate or recommend any particular insurer or insurance product offered by any insurer. This list of plans listed here comprise of insurance products offered by all the insurance partners of Policybazaar. For a complete list of insurers in India refer to the Insurance Regulatory and Development Authority of India website, www.irdai.gov.in
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