Difference Between Short Term and Long Term Health Insurance (2024)

Team AckoJan 17, 2024

Then saying that "Health is Wealth" has gained new meaning after the COVID-19 pandemic. People now understand the importance of having a financial back-up for medical treatment. This is crucial because the price of getting hospitalized has skyrocketed in recent times. Many now understand that buying a health insurance policy should be a priority, but some may not know which coverage to choose. This article will try to address this issue by explaining the differences in the Short Term and Long Term Health Insurance Plans.

What is a Short Term Health Insurance Plan?

Short Term Health Insurance Plans, are valid for a shorter duration of time as compared to a long term plan. Both plans offer similar coverage, but the validity of a short term plan is less. The policy period for such plans is usually less than 12 months.

Short Term vs Long Term Health Insurance:

A short term health insurance plan, needs to be renewed more frequently since it is valid for a short duration. On the other hand, a long term health insurance policy can keep you covered with medical insurance for two to three years. Here are the major differences between these two plans:

What is Included in Short Term Insurance?

A short term health insurance policy offers the coverage of a complete health insurance policy but for a shorter duration. Some Indian insurance companies offer short terms plans that have a validity of 3 months to 6 months.

The sum insured for a short term plan can be as high as 10 Lakh. But most people prefer to opt for a long term policy with such a high amount of sum insured. Usually, policyholders choose a sum insured that ranges from 1.5 to 3 Lakh rupees.

A short term policy comes with added benefits like No Claim Bonus and Free Annual Check-ups. One can get a tax benefit for buying a short terms health insurance plan as well.

Who Needs a Short-Term Health Insurance Plan?

One should always be covered under health insurance. However, opting specifically for a short terms plan can be suitable for a few people. Here are examples of who should buy a should term health insurance plan:

1. A non-residential Indian visiting for a short duration: He/she can avail medical insurance coverage against injuries, diseases, etc.

2. A person who is about to switch his/her job: A short term policy will be helpful if this person is completely reliant on the Employer’s Health insurance plan.

3. A person who wants to switch from one insurance company to another: Short term insurance is a good idea in this case because porting from one insurer to another might take more time than renewing the plan with the same insurer.

Also, read: Family health plan

Benefits of Short Term Health Insurance:

Apart from providing coverage for hospitalization, cashless facilities, free health check-ups, etc. a short term health insurance plan provides the following benefits to the policyholder:

1. Low Premiums

   Buying a health insurance policy that is valid for only a few months will cost you less than compared to buying a full-fledged plan. This is because the insurance company is liable to bear the cost of treatment on your behalf for a shorter duration of time.

2. Seamless Switch Between Insurance Companies

   Sometimes a policyholder may not be happy with the type of service he/she is receiving in terms of receiving the required coverage, turn around time for queries, or claim settlement. With a short term plan, one does not have to go through the hassle of porting the policy, or waiting for it to expire in order to switch to a better insurance company.

3. The Benefit of NCB

   Insurance companies offer NCB on short terms insurance plans as well. People who drive safely may not raise claims. They might feel that buying insurance is a waste of money. However, when they are awarded the NCB discount, they have a higher chance of renewing the policy and staying insured. The policyholder can renew the plan and enjoy discounted premiums with the flexibility offered by a Short Term Health plan.

Disadvantages of Short Term Health Insurance Plans:

Buying a short term insurance plan has the following disadvantages:

1. A short term plan needs frequent renewals.

2. The overall premium paid is more than the premium for a long term policy for the same duration.

3. The policyholder does not have the option to customize as much insurance coverage as compared to a long term plan.

What is Covered in Short Term Health Insurance Plans?

The coverages of a short term health insurance policy depend upon the insurance company. Usually, the following things are covered:

1. Hospitalization: Expenses related to hospitalization such as bed charges, doctor visits, medicines, room rent, cost of surgeries, operation theater charges, etc.

2. Ambulance charges: The cost of hiring an ambulance for transporting the patient from one place to another would be covered under short term health insurance.

3. Expenses related to organ donation: Some insurance companies may cover the cost of undergoing surgery for organ donation.

4. Health check-ups: Regular health check-ups are conducted on the insured persons to keep a tab on their current health status. This is crucial for detecting an ailment in its early stages.

5. Pre and post hospitalization: A planned surgery may require treatment before or after getting hospitalized. These charges are covered under a short term policy.

Frequently Asked Questions:

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