Anything that is marketed as a “zero-cost” product has a hidden price that customers have to pay – be it zero-cost term plan or a no-cost EMI on credit card purchases. In this article, we are talking about zero-cost term plan.

Imagine this: You are a 35-year-old chap, eyeing a zero-cost term plan deal. But there’s a catch. To get this deal, you would need a 40-year policy, covering you till the ripe age of 75. But hold on, there’s more. An exit strategy? Only available after 25 policy years, at 60 years young. 

Now, brace yourself for the numbers game!

For a Rs 1 crore coverage, you’ll be forking out Rs 25,953 annually for 25 years. But wait, if you are sure you won’t need the policy beyond 60, there’s a snazzier option! A shorter 25-year policy for the same coverage, but at a higher Rs 14,440 per year premium. Bingo! That’s Rs 11,153 (the difference) you’re tossing in for the ‘special exit’ feature at 60.

Here’s where it gets zesty! If you seize the exit option, you pocket Rs 5.25 lakh, but you’ve already shelled out Rs 6.48 lakh. Why the mismatch? The insurance company skips refunding the GST on annual premiums. Sneaky, right? 

Also Read: Health Insurance Plans for Senior Citizens in India: Full List 

But, drumroll, please! If you opt for the Rs 14,440 plan and sprinkle that extra Rs 11,153 into an equity mutual fund, expecting a 10% growth annually, guess what? You’ll be sitting on a cool Rs 12.45 lakh at age 60 instead of the paltry Rs 5.25 lakh zero-cost plan would have given you. 

Bottom line: Life insurance ain’t a freebie, folks! Thinking of it as an expense, sans expectation of a refund, might just be the golden rule. ‘Cause remember, in this world, there are no free lunches. How can an insurance policy be “zero-cost” then?

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