Long-Term Vs Short-Term Health Insurance: Which One Should You Buy?

Difference Between Long-Term and Short-Term Health Insurance

Long-term health insurance plans, like a critical illness plan or a family floater plan, have a specific purpose to serve. On the other hand, short-term health plans offer temporary coverage in case of sudden illness or medical emergencies, such as COVID-19 mediclaim plans, that were introduced to meet the coronavirus pandemic.

Here is a tabular difference between long-term and short-term health insurance:

What is Short-Term Health Insurance?

Short-term health insurance is a type of mediclaim plan that provides coverage for less than 1 year. It generally comes with a policy period of 3, 6 or 9 months and offers temporary coverage for a limited period. These plans focus on covering unexpected illnesses or injuries and are known for their affordability. In fact, short-term health plans require you to renew the policy frequently because it is valid only for a short duration. Moreover, such mediclaim insurance policies do not cover critical illnesses, maternity expenses and pre-existing diseases.

Benefits of Short-term Health Insurance

Here are some of the top benefits of investing in short-term health plans:

• Affordable: Short-term health insurance plans are affordable in comparison to long-term policies as they provide coverage for short duration only. This makes them ideal for those seeking temporary coverage without straining their budget.
• No Claim Bonus (NCB): These plans often come with the benefit of cumulative bonuses or NCB, which increase the coverage amount if no health insurance claims are made during the policy period. This makes them not only affordable but also rewarding for policyholders.
• Suitable for Specific Needs: Short-term health insurance is an ideal choice for people who primarily rely on employer-provided health insurance or are staying in the country for a short time. It offers flexibility and caters to unique situations where long-term insurance may not be necessary.
• Tax Savings Advantage: Policyholders can also enjoy tax benefits under Section 80D of the Income Tax Act, 1961, by opting for short-term health insurance.

What is Covered Under Short-Term Health Insurance?

The list of medical procedures covered under short-term health insurance plans is as follows:

• Hospitalization expenses
• Pre and post-hospitalization expenses
• Day care treatment
• Ambulance charges
• Organ donor expenses
• Operation theatre and surgery expenses

Who Should Buy a Short-Term Health Insurance Policy?

Short-term health insurance policies are ideal to meet the insurance needs for a temporary phase, like in case of job change, COVID-19 pandemic, etc. These plans help in filling the temporary gap in medical coverage during the transition phase. The following people should consider buying short-term plans:

• NRIs or Non-Resident Indians visiting for a short duration
• Individuals planning to port their policy in order to fill the time gap and stay insured during the portability period as well
• Individuals who are planning to switch their job
• Individuals seeking coverage for specific conditions like COVID-19.

What is Long-Term Health Insurance?

Long-term health insurance is a medical insurance plan that provides comprehensive coverage for 2-3 years. These plans require you to pay the premium for 2-3 years at the time of buying the policy. Moreover, the premium rates of these health plans are on the higher side because the benefits offered are extensive and for a longer duration. In fact, unlike short-term plans, you do not have to worry about renewing your long-term mediclaim policy every year.

Benefits of Long-Term Health Insurance

Check out the benefits of long-term health plans below:

• Extended Coverage Period: Long-term health insurance plans provide coverage for an extended period, usually lasting 2-3 years or more, depending on the policy. This ensures that you and your loved ones stay protected against unexpected medical expenses for a longer duration.
• Lower Premium Costs: Opting for a long-term health plan can be more cost-effective as many health insurance companies offer discounts for longer policy tenures, making the overall premium amount lower.
• No Need for Frequent Renewals: With long-term health insurance, you do not have to worry about renewing your policy every year. Since these plans are valid for 2-3 years, you only need to renew them after the tenure ends.
• Coverage for Pre-Existing Conditions: Health insurance plans cover pre-existing conditions after a waiting period of 2-3 years. For regular health plans, this often requires multiple renewals. However, long-term policies allow you to fulfil the PED waiting period within one policy term, thereby reducing the number of renewals.
• No Loss of NCB: In regular medical insurance plans, you risk losing your accumulated No Claim Bonus if you do not renew your policy on time. However, with long-term health plans, your NCB remains secure for the entire policy tenure, typically 2-3 years.
• Tax Saving: Premiums paid for long-term health insurance qualify for tax benefits under Section 80D of the Income Tax Act, 1961.

What is Covered Under Long-Term Health Insurance?

Some of the common expenses covered under long-term mediclaim insurance plans are as follows:

• Hospitalization expenses
• Pre and Post-hospitalization expenses
• Day care procedures
• Ambulance charges
• AYUSH treatments
• Add-on covers
• Modern treatments
• Critical Illness Cover
• Pre-existing diseases (PEDs)
• Maternity expenses
• Home care treatment

Who Should Buy a Long-Term Health Insurance Policy?

Long-term health insurance policies are suitable for everyone, as they provide comprehensive coverage for medical expenses over an extended period. These policies are especially beneficial for individuals who want to secure their future against the rising costs of healthcare.

Young people can benefit from long-term plans by locking in lower premiums at an early age, while older individuals can ensure financial support for age-related illnesses. In fact, there are certain benefits, like the coverage for PEDs, premium discounts, etc., that are available with long-term plans only.

Long-Term Vs Short-Term Health Insurance - What to Choose?

Once you have gained a thorough understanding of both long-term and short-term health insurance, you can make an informed decision based on your unique needs and circumstances. Whether you opt for a long-term plan or a short-term plan, each offers its own set of benefits to help support your healthcare needs.

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