Today, many people in India are talking about a new kind of insurance – zero cost term insurance. It sounds very attractive because the word “zero cost” means you don’t have to pay anything at the end. But is it really free? Or are there some hidden things that people don’t know?
In this blog, we will try to understand what zero cost term insurance is, how it works, is it better than regular term insurance, and most importantly – is it really zero cost?
✅ What is Zero Cost Term Insurance?
Zero cost term insurance is a type of term insurance in India where you pay a premium for a few years, and if you survive the policy term (means you don’t die), then your full premium money is returned to you.
So it looks like you are getting insurance for free, because at the end you get your money back.
But the truth is, it is not really free. Insurance companies are still taking your money, investing it, and giving you back after 20-30 years. You don’t get any interest or bonus like other investment options.
✅ How Zero-Cost Term Plans Are Different From Regular Term Plans?
Let’s understand the difference in simple words:
| Feature | Regular Term Plan | Zero Cost Term Plan |
| Premium Return | No | Yes |
| Cost | Low premium | Higher premium |
| Death Benefit | Yes | Yes |
| Refund if Survive | No | Yes |
| Flexibility | Fixed | Limited options |
So, in regular term insurance, you pay a low premium and get high life cover. But you don’t get any money back if you survive.
In zero cost term insurance, you pay a higher premium, and if you don’t claim, your premium is returned after 25 or 30 years.
✅ Is Zero-Cost Term Plan Really Free?
No, it is not actually free. Here’s why:
- You Pay More Premium – The premium in zero cost term insurance is 1.5x to 2x more than normal term plan.
- No Interest Return – You get only the premium back, no returns like FD or mutual fund.
- Lock-In Period – If you stop the policy in between, you may lose your premium or get very less refund.
- Charges Are Hidden – There are policy admin charges, GST, and other things which are cut from your refund.
So, companies are just playing with words like “zero-cost” to attract more people.
✅ Why Are People Choosing Zero-Cost Plans?
Even after these things, many people in India are choosing these plans. Why?
- They don’t want to “lose money” in term insurance.
- They feel safe that premium will be returned.
- It looks like a mix of insurance + saving.
But this is not always the best idea.
✅ Should You Buy Zero-Cost Term Insurance?
It depends on your personal goal. Here are 2 examples:
- If You Want Pure Protection: Then go for the best term insurance plan with a low premium. It gives a big cover for less money.
- If You Want Refund Too: Then zero-cost plan may look better, but remember – you are paying more, and not earning anything on that money.
Also, check if you have better investment options like mutual funds, PPF, FD etc. Those give return + flexibility.
✅ Best Companies Offering Zero-Cost Term Insurance in India
Here are some insurance companies offering such plans:
- HDFC Life Click 2 Protect Return of Premium
- ICICI Pru iProtect Return of Premium
- Max Life Smart Secure Plus Plan
- Bajaj Allianz Life Smart Protect Goal
But always compare plans, read policy terms, and check claim settlement ratio before buying.
✅ Things to Check Before Buying Zero-Cost Term Plan
- Policy term and maturity age
- How much refund will come and when?
- Are there any surrender charges?
- Does it cover death due to accident or illness?
- What happens if you stop the premium in between?
These questions are very important before you choose any term insurance in India.
✅ Expert Tip: Compare with DIY Plan
Suppose your zero-cost term plan premium is ₹20,000 per year for 30 years. Total payment = ₹6,00,000.
Instead of this, you can:
- Buy regular term plan for ₹8,000 per year (same cover)
- Invest the rest ₹12,000/year in mutual fund or FD
After 30 years, your investment may become ₹15–20 lakhs (depends on return). And you also had insurance protection.
So this combo may be better than a zero-cost plan in the long term.
💡 FAQs – Zero Cost Term Insurance in India
Q1. Is zero-cost term insurance really free?
No, it is not truly free. You pay a premium every year and get that same money back later. But there is no return on it.
Q2. Is a zero-cost plan better than normal term insurance?
Not always. Normal term insurance gives better value if your main goal is protection. A zero-cost plan is good only if you want money back.
Q3. Can I stop the zero-cost policy in between?
Yes, but you may lose some amount or not get a full refund. Always check surrender value and conditions in the policy brochure.
Q4. Do zero-cost plans cover COVID-19 or critical illness?
Some plans may include riders like accidental cover, critical illness, etc. But it will cost extra. Always check benefit details.
Q5. Which is the best term insurance plan in India right now?
It depends on your age, income, and needs. But HDFC Life, Max Life, ICICI Prudential, Tata AIA are among top trusted names with good claim ratio.
✅ Conclusion
Zero cost term insurance sounds like a smart deal – getting protection and getting back your money too. But the truth is – it is not free. You pay more, and you don’t earn anything from it. It is not an investment.
If your goal is pure protection, then go for the best term insurance plan with low premium and high cover.
If you really want a refund, then compare all plans, check the return value, and calculate if it’s worth paying more.
At the end, financial planning should be done smartly – not emotionally.
I am a digital marketing executive as well as content writer in the personal finance and investment related blogs. My goal is to provide simple, interesting and reliable information to readers through my articles so that they always stay updated with the world of personal finance and investment.
