How to Choose Between a Short-Term and Long-Term Health Insurance Policy?

Medical exigencies come unannounced and can put you in a tough spot, both mentally and financially. While the mental stress can be managed, financial stress leads to compromises in the treatment. Who would want their treatment to be compromised? For that reason, a medical insurance is necessary. Once regarded as a luxury, it is no longer one, but a necessity instead. Moreover, owing to the change in lifestyle, medical insurance has become a crucial part of your financial plan too.

Selecting a medical insurance policy depends on your requirements, i.e. medical conditions, age, policy features and various other factors. One such factor is the tenure of the policy. There is a choice between short-term plan or a long-term plan.

This article demystifies what is health insurance, details surrounding short & long-terms covers and what can be best suit your requirements.

Short-term health insurance policy

Short term plans are those policies that have a tenure ranging from six months to two years. These health covers help provide coverage for both medical treatment as well as travel related situations. Any financial losses arising on these two fronts in covered by a short-term policy. Since the validity of this medical insurance is not for a longer duration, the premiums are not expensive. Here are some of the advantages of a short-term policy:

  1. The insurance policy need not be renewed each quarter. It automatically expires after the said policy duration is completed. This has the benefit of providing coverage for a specified duration without having to renew it further.
  2. A short-term policy is specifically suited for international students and travellers. Since their term of stay in a foreign land for a short duration, it comes handy to insure against health contingencies that may arise for this duration.
  3. Some insurance companies extend the coverage for these plans to international locations as well. Thus, any medical situation faced away from your home country is also reimbursed.

* Standard T&C Apply

Long-term health insurance policy

As the name suggest, the validity of these policies is longer than a short-term policy. Hence, you always have the advantage of being protected by your insurer. These plans can not only be purchased on an individual basis, but also for your family. Even medical insurance for senior citizens are available in the form of long-term policies. Here’s how a long-term policy ranks over a short-term cover:

  1. A long-term policy has extensive coverage which not only covers hospitalisation costs, but also other expenses like pre and post treatment costs.
  2. The coverage for these policies is available as long as you pay premiums subject to the maximum age till the policy offers coverage.

* Standard T&C Apply

How does the short-term policy differ from a long-term plan?

Short-term insurance Long-term insurance
The premiums are affordable since the tenure of the plan is limited. The premiums are expensive for the longer time it offers coverage.
These plans generally do not have income tax deductions. Income tax deduction can be claimed since the plans exceed a fiscal year and are recognised as per the Income Tax Act of 1988.
The fluctuating premiums impact the customer at each renewal. Since the premium is paid for a longer duration, no changes in the premium rates impact customer.

Please not that tax benefit is subject to change in tax laws.

With the above guide in choosing a short-term or long-term policy, you can arrive at a conclusion in buying what is right for you. Also, remember insurance is the subject matter of solicitation. For more details on benefits, exclusions, limitations, terms and conditions, please read sales brochure/policy wording carefully before concluding a sale.

 

 

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