The main point of term insurance is to provide a financial safety net for your family. The coverage of a term plan stays in effect for a set amount of time. It gives a certain pre-decided amount of money to the person you choose if something unprecedented happens during this time.

Many term plans cover you for anywhere from 5 to 40 years. However, you can choose a short policy period if you only need a short-term financial safety net for your family. A short-term insurance policy is a type of term plan with a relatively smaller time period of coverage.

Things to know about short-term insurance: 

There are multiple shortterm insurance benefits. Read on:

  1. Death benefit: If something unfortunate were to happen to you during the term duration of the policy, the policy would pay the sum assured to your appointed nominee.
  2. Tax benefits: Under Section 80C of the Income Tax Act, 1961, you can deduct the premiums for your short-term policy from your taxable income. These tax benefits vary depending on several factors, such as the plan you choose, the tax regime you follow (old/new), and more. It would be advisable to talk to your financial advisor to understand this better. 
  3. Add-on covers: In exchange for a slightly higher premium, you can add extra coverage to your basic plan and get the following:
  • A lump sum payment benefit if you are detected with a critical illness covered by the plan
  • Payouts for policyholders who can never work again because of an accidental disability
  • If you were to pass away because of an accident, your family would get extra money on top of the assured base amount
  1. Low premiums: Term plans do not have any special investment-related features. So, the premiums for these policies are usually lower than those for other types of life insurance. However, the premium amount depends on how long the policy is for and how much sum assured is expected if an unfortunate event occurs. Since this insurance policy is only for a short duration, the premiums are usually low.

When is it a good idea to get short-term insurance?

A short-term plan can help if you have immediate financial obligations that could be hard on your family if something unexpected happens. You might want to get this policy if:

  1. You have an unpaid debt: The policy term can be the same as how long it may take you to pay off a loan or mortgage. The money would help your family repay the loan if something unfortunate were to happen to you before paying the debt off. 
  2. You only have a few years left to work: People often use term plans to protect their finances while still employed. If you’re getting close to retirement, a short-term policy can protect your family’s finances until your pensions or other retirement investments can kick in. 
  3. You’re an older person, and your old life insurance is about to run out: Many insurers let people buy term plans until they are 65 years old. If you are over 60 years old and think that your family members will soon be able to live on their own, a short-term insurance policy might be right for you. 
  4. It’s almost time to take care of your financial obligations: You might have to pay for your child’s college or wedding in a few years. In these situations, an unexpected event can make it hard for your loved ones to fulfill these life goals. A short-term policy can offer your family the much-required financial relief while completing these obligations in your absence.

There definitely are a lot of short-term insurance benefits. However, it may not always be that a short-term policy can replace all the coverage your family needs. In case of an emergency, they may need a more comprehensive plan to pay for their living costs along with the surprise financial obligation facing them. You should only use short-term insurance as an extra layer of financial protection on top of your existing life insurance or to fill in any gaps in your insurance.

A term insurance plan calculator is the ideal way to figure out premium estimates for the plans you may be considering more. It can help you determine if a certain short-term plan fits your budget along with your needs by creating premium estimates. A term insurance plan calculator is fairly reliable as it takes several factors into consideration like your health, lifestyle, income, gender, and more.

Conclusion

It is easy to check out the term insurance benefits and the amount of the premiums online. You should compare term plans online when you need extra life insurance for a short time. Be sure of the period that you need the cover for while opting for your plan.

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