Short-Term Life Insurance
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Way.com: Find the Best Life Insurance Company
No Medical Exams
100% Online
Get estimates in seconds
4.9/5 Rating on the App Store
Key Takeaways
Once you understand the necessity of a life insurance policy, waiting to purchase one could be exhausting. If you cannot contain the anxiety of not having life insurance and mind the gaps in between, short-term insurance is the best option.
Here we look at what it means to have short-term life insurance and who should consider buying one.
Short-term life insurance is a temporary insurance which lasts for less than a year. This insurance works well for those between changing jobs or falling into a waiting period for long-term insurance.
Therefore, short-term life insurance is a stop-gap insurance solution with an expiry date of not more than a year.
While you wait for your insurer to decide on a longer-term application, are between jobs, or are working to increase your chances of getting a better life insurance rate in the future, short-term life insurance comes into play. It offers temporary financial protection during any period of transition where you want to avoid a coverage gap.
The duration of short-term life insurance is between a month to a year. Due to the short duration, the coverage amount is also less, ranging between $250,000 to $1 million. However, the coverage and premium rates will vary with each provider. For example, some providers will insist on paying the premiums early and initiate the process.
When it comes to short-term life insurance, there are two different types of insurance. It includes temporary and annual renewable life insurance.
Temporary life insurance is short-term insurance that will provide coverage when you wait for the permanent policy you have applied for. This works well in cases where the health exam or the medical underwriting process takes a long time. Therefore, the longer the time takes for the policy to kick in, the longer you are without insurance coverage. Having short-term insurance helps in such cases.
However, a temporary policy is not a stand-alone or alternative to a permanent one. In addition, you may not qualify for this if you have a pre-existing health condition like HIV, diabetes, cancer, or heart disease.
An annual renewable life insurance is purchased if you suspect any health conditions or changes in the existing conditions that can influence the insurance rates of your permanent policy. For instance, if you are a smoker trying to quit smoking, an annually renewable policy will provide coverage at rates higher than the term or whole life insurance policies. But it guarantees coverage during that period, unlike the permanent policy, which takes some time to initiate.
Annual renewable life insurance with a year's term and annual renewal. However, the premium rates will increase with each renewal. Therefore, it is not suggested for longer years.
Short-term insurance is a temporary setup to eliminate the coverage gaps created by purchasing permanent or term life insurance policies. Though not a complete solution regarding insurance policies, here are the situations when you should consider purchasing short-term life insurance.
If you passed away when you were working to pay it off, having short-term coverage will support the beneficiaries in paying it off.
Suppose you had group insurance from your previous employer and have lost the existing group insurance policy. In that case, a short-term policy will cover the gap created for the initiation process for insurance by the new employer.
A short-term policy can cover you if you have undertaken a high-risk job. It can cover you during that period and later apply for a permanent policy.
When calculating your premium, life insurers consider your weight, whether you smoke, and overall health. A short-term policy may protect you while you work on improving your health until you are ready to apply for a longer-term life insurance policy.
Your age, general health, and whether or not you smoke will all impact how much short-term life insurance coverage will cost.
Some insurance companies offer free temporary coverage. Sometimes you'll pay the Cost of one month's premium. But when you sign your final policy, that payment will be applied to your initial premium so that it won't cost you any more money in the long run.
On the other hand, annual renewable term policies have a lower initial premium than term life insurance policies, but their costs rise annually.
| Age | Gender | $250,000 | $500,000 | $1 million |
|---|---|---|---|---|
| 25 | Male | $24 | $33 | $49 |
| Female | $20 | $27 | $38 | |
| 35 | Female | $22 | $31 | $48 |
| Male | $24 | $36 | $57 | |
| 45 | Female | $34 | $55 | $92 |
| Male | $41 | $67 | $118 | |
| 55 | Female | $67 | $117 | $212 |
| Male | $90 | $159 | $287 |
Short-term insurance is not an alternative to long-term life insurance policies. However, term and permanent life insurance policies can be the best alternatives to short-term life insurance.
The worthiness of any policy might be highly subjective. It entirely depends on the customer profile, the needs, and the financial obligations, including the required coverage and duration. It is a good option who are looking for financial protection for a limited time.
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