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Why Should You Rethink Short Term Insurance Plans?

11/10/2022 |

Life insurers offer a range of plans. Of these, term life insurance is one of the most basic plans that offer coverage for a fixed term at a fixed premium rate. A life insurance policy is usually associated with insurance coverage for your entire life.

However, most insurers also offer term life insurance policies for shorter terms called Short Term Insurance Plans. In this article, we will talk about a Short Term Insurance Policy and talk about the benefits it offers as well as when you might want to consider opting for one.


Understanding Short Term Insurance Plans

 Life insurance policies offer compensation to the beneficiary of the policy upon the death of the policyholder. People usually buy life insurance policies for a long term that covers their entire life. In a Short Term Insurance Plan, you can purchase term life insurance for a shorter term. This is usually less than a year.


When Would You Need Short Term Insurance?

Term insurance can offer protection to your family and loved ones in the event of an unforeseen disaster. If you are expecting to face some difficult times for a short duration, then opting for a short-term plan can help you get the desired coverage to boost the financial safety net for your family.  Here are some short-term insurance benefits:
 

  • Coverage for major changes in lifestyle

    In Term Life Insurance, the premium of the policy varies as per the health of the insured person at the time of taking the policy (or renewing it). This means that if you have health conditions that are considered to be risky by the life insurance company, then you might have to pay more premium for the policy.

    Most people live sedentary or unhealthy lifestyles since their professional and personal responsibilities leave them with little or no time to take care of their health. However, if you have decided to improve your health, like losing extra weight or quitting an addiction, then you can opt for short-term insurance while you work on getting yourself healthier. As your health improves, you can look for a long-term life insurance plan and get good rates on it.

  • Protection against sudden exposure to danger

    Sometimes, you might find yourself in a situation where you are exposed to higher levels of danger each day. For example, you take up a temporary job as a pilot, or on a cruise ship, or move to a location where the risk to life is high. However, this is a temporary situation, and you know that you will not be in it for a long time. In such cases, short-term insurance plans can help you ensure financial protection for your family.

  • A prudent tool against short-term debts

    Finance experts recommend taking a life insurance policy with a long-term loan like a home loan to ensure the financial protection and peace of mind of your loved ones. While many people realise the importance of life insurance for home loans, the same approach is not taken for short-term debts. If certain situations have resulted in short-term loans or other financial liabilities, then opting for a short-term insurance plan can help ensure that you don’t leave your family with a huge debt.

  • Employees between jobs

    Many companies offer life insurance policies to all their employees. Hence, they don’t buy a separate policy. While some of these policies offer adequate coverage, they are valid only until you are on the job. The policy lapses as soon as you quit the job.

    If you are between jobs or have decided to take a sabbatical and pursue a business or higher education, then a short-term life insurance plan can help you get coverage before you start another job.
     
Short Term vs Long Term Life Insurance

Here is a quick look at the comparison between short-term life insurance and long-term life insurance:
 

Factor

Short Term Life Insurance

Long Term Life Insurance

Available policy terms

Usually, less than one year

More than one year

Can you change the premium rate?

Yes. Policyholders can get different premium rates based on their preferences

Policyholders cannot impact the premium rate of the policy


How to Choose the Right Policy Period for Your Term Insurance Policy?
 

 

It is easy to plan for the things that you want to do in the future. However, planning for unexpected emergencies can be overwhelming. There are two things that you need to keep in mind while buying term insurance:
 

  • How much do you want to be insured for?
  • How long do you want the coverage for?
     

While you need to consider your financial obligations and goals to choose the right period, most people opt for a policy that covers them at least until they are earning. Short-term policies can be used to boost your coverage due to sudden changes in your life that expose you to more danger.
 

Conclusion
 

When you decide to buy term insurance, it is important to remember that the policy is designed to help you create a financial safety net for your family and loved ones in the event of an unforeseen disaster. While buying a long term insurance plan is usually recommended, short-term plans can help you get the right coverage during temporary phases of your life when you are exposed to higher risks. Tata AIA Life insurance offers you plans for different tenures depending upon your requirements. Also, you can choose the premium payment term according to your needs


L&C/Advt/2022/Oct/2457.

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Tata AIA Life Insurance

A joint venture between Tata Sons Pvt. Ltd. and AIA Group Ltd. (AIA),  Tata AIA Life Insurance  is one of the leading life insurance providers in India. We post everything you need to know about life insurance, tax savings and a variety of lateral topics such as savings and investments in this space. You can access and read a host of different blogs, articles and pages at the Tata AIA Life Insurance Knowledge Center or get in touch with us with any queries or questions!

View all posts by Tata AIA Life Insurance

Frequently Asked Questions

What is short-term life insurance?

Short Term Life Insurance policies are term insurance plans that offer coverage for shorter periods – usually less than a year. They are designed to help people get coverage for a temporary change in lifestyle and risks.

What is considered short-term insurance?

There is no fixed definition of the period that defines a short-term insurance policy. Usually, insurance companies offer plans of less than one year under short-term insurance.

What do I need to know about short-term insurance?

Here are some important things that you need to know about short-term insurance:

  • Short Term Insurance plans are usually available for up to one year
  • The premium is generally lesser since the tenure is short and there is no investment component
  • It can help offer coverage for a temporary increase in risks

Disclaimers

  • Insurance cover is available under the product.
  •  The products are underwritten by Tata AIA Life Insurance Company Ltd.
  • The plans are not a guaranteed issuance plan, and it will be subject to Company’s underwriting and acceptance.
  • For more details on risk factors, terms and conditions please read sales brochure carefully before concluding a sale.
  • This blog is for information and illustrative purposes only and does not purport to any financial or investment services and do not offer or form part of any offer or recommendation. The information is not and should not be regarded as investment advice or as a recommendation regarding any particular security or course of action.
  • Please know the associated risks and the applicable charges, from your Insurance agent or the Intermediary or policy document issued by the insurance company.
  • Every effort is made to ensure that all information contained in this blog is accurate at the date of publication, however, the Tata AIA Life shall not have any liability for any damages of any kind (including but not limited to errors and omissions) whatsoever relating to this material.