What is no-cost term insurance? Is it a better offering than plain term plan

No-cost or Zero cost term insurance is the third variant of term insurance offering, other than the usual plain vanilla term insurance plan and term insurance with return of premium option. Primarily, the policy offers similar benefits as in the usual term plan but at no cost to the policyholders. Herein at the policyholder’s will any premium paid towards the policy will be returned back to the policyholder upon policy maturity. 

How does this no-cost term insurance work?

Herein the life insurer typically invests the policyholders premium and uses the return to make up for the insurance costs. So, as in the otherwise plain vanilla term plan that requires regular premium payment for maintaining life insurance coverage, zero-cost term insurance offers a cost-effective alternative.

Who should opt for no-cost term insurance?

According to Rakesh Goyal, Director Probusinsurance.com, no-cost term insurance is best suited for individuals who need essential life insurance coverage without the added expense of extra features or riders. 

It's an ideal option for those who prioritize affordability and simplicity, such as young professionals, individuals with limited budgets, or anyone looking for basic financial protection for their family without the complexity of additional benefits, he added.

What is its advantage over a plain vanilla term plan?

Goyal explaining the benefit of no cost term plan said the primary advantage of no-cost term insurance over a plain vanilla term plan is its cost-effectiveness. He mentioned that by eliminating additional riders and investment components, no-cost term insurance offers lower premiums, making it a more affordable choice for individuals seeking essential life coverage. This streamlined approach ensures that policyholders receive straightforward protection, making it easier to understand and manage their insurance needs.