As a caregiver of your family, you need to protect them financially in your presence as well as your absence. Life insurance provides financial cover for your loved ones in your absence. While choosing one, you might notice the many options available these days. This is because people have different needs and need different types of insurance policies accordingly. Most people go for term insurance (which provides long-term protection). While insurance in the long haul is a practical choice, some individuals might need a short-term cover to meet specific needs.
Meaning of short-term life insurance
Short-term life insurance is a life insurance policy that provides coverage for a period of less than a year. It provides you with a life cover for a short time and for a specific purpose. It is usually an add-on to existing long-term insurance or even an alternative option sometimes. Short-term policies are usually renewable each year. However, the term insurance premiums for these short plans usually increase each year as your age increases.
Scenarios where people buy a short-term life insurance
With the unpredictability of life, it is important to safeguard the life of your loved ones in your absence. Here are some situations wherein people usually prefer purchasing a short-term life insurance policy.
Risky professions
The insurance companies charge different premiums based on the profession of the policyholder. If your profession is such where your life is susceptible to danger, you may have to pay a higher term insurance premium. A term insurance policy will benefit you in such cases, especially if you are temporarily engaged in occupations involving activities like flying an aerial vehicle, working in a factory, or mining. Prefer short-term insurance, which gives you temporary coverage for a high premium.
Protection against short-term loans
If there are some short-term debts that burden you, a short-term insurance policy is an ideal fit for you. In any unforeseen circumstances, your family will not be burdened by a huge debt. Your policy will easily cover your short-term bank loans and mortgages. You can also buy a short-term policy as an additional cover for your existing policy. This temporary cover will help compensate for the short-term financial debts.
Unhealthy lifestyle and lack of physical wellbeing
What term insurance does is give you a life cover. Your health and lifestyle play a huge role in determining your longevity. Hence, insurance companies consider them as a major factor in determining the premium of your life cover. Wait before buying long-term insurance if you are working on improving your health conditions by losing weight, reducing your alcohol consumption, or quitting smoking. You can temporarily avail of short-term insurance till you work on improving your health. After you have made substantial lifestyle changes, you can select a term policy with a low premium for the long run.
Salaried individuals during a job search
Most organisations usually provide their employees with a life insurance policy. However, if you have left your job and plan to take a break for a short while, purchase a short-term plan to secure your life. You can use a term insurance calculator to know the premium you need for your short-term policy.
Other temporary scenarios
What short-term life insurance does is that it provides you with a life cover for a small period. When you are travelling and need an additional layer of coverage, you can opt for short-term insurance. Also, if you are going to a thrilling activity or exposing yourself to a dangerous event, an additional blanket of policy cover is always helpful. These short-term plans ensure that the financial needs of your dependents are secure.
If any of the above scenarios apply to you, buying a short-term policy is a good idea. It is a great way to get a temporary additional life cover. You can use a term insurance calculator online to get an idea of the premiums and covers of your short-term life insurance. If you are unsure of your need for a short-term life insurance, it is advisable to seek the opinion of a qualified insurance agent or a financial advisor.
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