4 Advantages of a Short Term Life Insurance

The value of life isn’t measured in numbers. True, but in some cases, the value of life is directly proportional to your loved one’s well-being. While insurance can cover the financial well-being but what if an individual doesn’t have enough earning to pay the high insurance premium? Under such circumstances, short-term life insurance is mostly preferred.  

Short-term insurance— can it become a short-term lifesaver? 

As the name suggests as short term insurance policy offers insurance coverage for less than a year. It safeguards the short term interest of the users for a specified period. However, short-term life insurance isn’t a cheaper alternative to long term life insurance. So, under which circumstances can, you prefer to opt for short-term life insurance? You can use a short term insurance policy as an additional layer of coverage to an existing policy or a single policy offering short term benefits. A user can apply for short term insurance policy if—

  • They want an additional layer of insurance coverage while traveling
  • They want financial security for their new business which may/ may not be a success in the long run
  • They want short term coverage when exposed to dangerous events

Depending on their needs, users can select between two types of short term life insurance—annual renewable life insurance policy and temporary life insurance policy.

Annual Renewable Policy:

Under this type of life insurance, there is term tenure of one year, and users can renew it each year. Although it works mostly like term insurance, it starts with a minimal premium rate lower than the traditional life insurance premiums and increases each year with the policy renewal.

Temporary Life Insurance Policy:

Under this policy scheme, the insurance carriers offer some coverage until the user waits for their policy to go in force. Hence an individual is insured during the tenure between the initial life insurance application and the policy’s effective date. However, this life insurance has certain limitations because it is not a stand-alone policy, meaning it is tied with permanent or term insurance policies.

The advantages of having short-term life insurance

While most life insurance companies offer 30 years of coverage for term insurance and entire life in permanent long-term insurance, short term life insurance also have some impeccable benefits.

  • Less Expensive

One of the most imperative aspects of short term life insurance is its cost-effectiveness. As insurance is dedicated to offering coverage for a limited period, the premium costs are comparatively much more affordable than other insurance policies. This is because insurance companies hope that users will outlive the policy tenure, and they need not shell out the policy claims, which is otherwise in long-term life insurance policies.

  • Ensures Flexibility

Short term policies are flexible as they can be renewed each year. So users have the leverage to choose whether or not to renew their short term policy or opt for a term policy or long-term life insurance depending upon their individual requirements.

  • Best suited for young age group

The young age group is mostly benefitted from short term policies because it offers coverage for a specified span and doesn’t build cash value. In short, these are less expensive, which makes it ideal for buzzing entrepreneurs starting a new business or an individual starting a new family.

  • Simplistic policy regulations

Short-term insurance policies have simple norms that are easy to understand by any user. It also offers the users the leverage to compare rates and make decisions based on three aspects— preferred company, coverage amount, and term length.

Bottom-line

Did you ever wonder why there are so many types of life insurance policies? It’s because every individual has varied needs. Versatility enables users to select the life insurance best suited to offer the death benefit, which the insurance policies render. While most people prefer long-term life insurance, others may need short-term insurance, depending on their needs. 

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