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6 Times Short Term Life Insurance is a Good Idea

Insuring the life of your loved ones is always a good idea. Be it whole or short-term life insurance, each offers a significant financial cushion to your family. In this piece of article, you can find details about short-term insurance plans.

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What is Short Term Life Insurance?

Short-term life insurance is an adequate alternative to providing financial protection to your family while you decide on a long-term insurance plan. The policy remains in effect for one year, which can be renewed each year. However, the premiums of short-term life insurance increase each year significantly.

Note: Now that you know that what Short Term Life Insurance you should also know about what is term insurance before buying any term plan for your loved ones.

Term Plans

₹1
Crore

Life Cover

@ Starting from ₹ 16/day⁺

₹50
LAKH

Life Cover

@ Starting from ₹ 8/day⁺

₹75
LAKH

Life Cover

@ Starting from ₹ 12/day⁺

Types of short-term life insurance policies are:

Annual Renewable Term (ART) offers one-year protection that can be renewed annually, increasing the premium every year. Thus, making it substantially more expensive than the traditional policies over the years. If you do not want to purchase a long-term policy, choosing ART can also serve the purpose.
Temporary life insurance ranging between one to three months is used to cover the intermediate period taken by an insurer to issue a full-time policy. There is usually a significant time gap between the initial application for the policy and its final effective date since the application passes through various documentary and procedural requirements.

When Do You Need Short-Term Life Insurance?

Working out ways to save your loved ones in your absence is the real sense of accountability. In difficult times, you can call for a safety net in the form of short-term alternatives.

Here are some reasons for you to buy a short-term life insurance policy:

Substantial changes in lifestyle or physical wellbeing

The amount of premium you pay is directly related to your overall health status at a point in time. A short-term policy would fit in perfectly well for the time you are working on improving your health conditions - be it losing those extra pounds of weight or quitting smoking or alcohol. As your health improves, you can opt for a long-term policy with lower premium rates at a later stage.
Susceptibility to danger

The premiums charged by the traditional policy insurers is also linked to the level of danger you are exposed to each day. If you are temporarily engaged in occupations like pilots, mining and factory workers, short-term plans add a layer of financial security.
Processing long-term life insurance policy

When you apply for a long-term life insurance policy, it usually takes around five to six weeks for it to come into effect. During this period, a short-term policy can help protect against life’s uncertainties. Once you terminate this policy, your actual long-term policy is approved and comes into force.
Shield against short-term debts

The unforeseen can take place at any time in life. Leaving your family with huge debt can potentially have an adverse impact on their lives. Ensuring your family's financial stability and lifestyle by opting for ART plans becomes a wise choice. Short term bank loans, account payables, lease payments, statutory payable dues are all examples of the same.
Salaried individuals searching for a new job

Employers usually provide life insurance policies at work. If you are planning to take a break from work for a short span or looking for better career alternatives, you can cover risks with the help of temporary or short-term policies.
Other temporary needs

Insurance needs are highly individual specific and thereby offer flexibility. Temporary needs like financial protection during the waiting period or exposure to danger can be met with short-term life insurance policies. Securing the financial needs of your dependents can be done with the help of short-term plans.

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⁺Standard T&C Applied

Short Term Vs Long Term Insurance Policies

Policy Feature	Short Term Policies	Long Term Policies
Length of coverage	One Year or Less	More than a year
Premiums	Premium increase gradually	Remain the same
Permanent Coverage	No	Yes – for Whole Life Insurance
Accumulates Cash Value	No	Yes – for Whole Life Insurance
Eligible for annual dividends	No	Yes – for Whole Life Insurance

Note: It is suggested to calculate the term plan premium on the term insurance calculator online tool by Policybazaar before buying.

What Are the Documents Required to Buy a Short-Term Policy?

For purchasing a short-term policy, the documents required are:

Proof of income – salary slips, income tax returns, bank statements, CA certificates, Form 16
Proof of residence – Aadhar card, voter ID, driving licence, Passport, utility bills, ration card, and passbook
Proof of Identity - Passport, PAN card, Aadhar card, voter ID
Proof of age - Passport, PAN card, Aadhar card, voter ID
Duly filled application form
Self-declaration form

How To Choose Your Insurance Provider?

Several factors are to be borne in mind while selecting the policy that suits you the best:

Market reputation of the service provider: Know about your insurance provider in detail- their financial strength, their mission, vision and goals, types of products they sell, how long they have been in this field and so on.
Customer reviews: The consumers are the best judges; their experiences are true and valuable. Research and find out what the ultimate consumer has to say about the products of the insurer and how good their service experience has been.
Evaluation of the sum assured: Select the insurance provider that provides you with the maximum coverage based on your needs and expectations.
Premiums: Look for discounts in the premium charged and prevailing offers to meet your financial goals alongside.
Claim Settlement Ratio (CSR): The claim settlement ratio is the number of claims settled by the insurance provider in proportion to the total claims received. Ensure that you choose the provider that has the highest claim settlement ratio.
Ease of doing business: It is important to ensure that your service provider is easily accessible at the time of need, premium payments are hassle-free, and all your questions are answered.
Business volume: Analysing the provider's business before trusting the same would be a wise move to go with.
Full disclosure: Ensure that your insurance company provides you with all the necessary details and clears doubts about the terms and conditions of your policy.

Short-term insurance is a viable option for those who want temporary protection while researching standard term or whole life insurance. You can also buy these for an additional layer of security to life.

Note: Check all the best term insurance plan in India.

Note: You should also check the benefits of term life insurance if you are planning to purchase the term insurance plan.

FAQs

Q. Is short-term life insurance cost feasible?

Ans: Although the premium for a short-term policy starts at a lower rate, the cost of short-term annually renewable policies tends to increase each year, making it relatively costlier than the standard policies in the long run.
Q. Are there any alternatives to short-term life insurance?

Ans: The traditional long-term policies that are always available, apart from the same term life insurance policies that provide coverage for a fixed number of years, are also preferred by several people.
Q. How much insurance cover do you need?

Ans: The coverage required shall vary depending upon your age, marital status, outstanding liabilities, lifestyle, expenses, source of income and the like.
Q. What is the impact of COVID-19 on short-term policies?

Ans: The pandemic has caused havoc across the globe. If you cannot afford a long-term policy on account of the financial trauma faced, short-term policies can be used as a remedial alternative.
Q. Who should buy short-term policies?

Ans: Young individuals, single adults, new families, people with children or adult children with special needs, people having loans, senior citizens, retired persons, business owners are the ones who should opt for short-term insurance.
Q. Does it prepare you for the worst?

Ans: It cannot cover your absence to your family but can help them maintain their current lifestyle in your absence and ensure financial stability against unanticipated events.

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˜Top 5 plans based on annualized premium for bookings made on https://www.policybazaar.com in the first 6 months of FY 24-25.

Policybazaar does not endorse, rate or recommend any particular insurer or insurance product offered by any insurer. This list of plans listed here comprise of insurance products offered by all the insurance partners of Policybazaar. For a complete list of insurers in India refer to the Insurance Regulatory and Development Authority of India website, www.irdai.gov.in

+Rs. 487/month (Rs.16/day) is starting price for a 1 crore term life insurance for an 18 year-old male, non-smoker, with no pre-existing diseases, cover upto 38 years of age.

Prices offered by the insurer are as per the approved insurance plans | #All savings and online discounts are provided by insurers as per IRDAI approved insurance plans | Standard Terms and Conditions Apply | **Tax Benefits are subject to changes in tax laws.| Policybazaar Insurance Brokers Private Limited

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+Rs. 820/month is starting price for a 2 crore term life insurance for an (NRI) 18 year-old male, non-smoker, with no pre-existing diseases, cover upto 38 years of age.

+Rs. 1,443/month is starting price for a 5 crore term life insurance for an (NRI) 18 year-old male, non-smoker, with no pre-existing diseases, cover upto 38 years of age.