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Short Term Life Insurance

We often associate life insurance with being a long-term commitment. There are however situations where a short term policy is the right product to get. So, how does it work and who needs it?

What is short term life insurance?

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Short term life insurance generally refers to any life insurance policy that offers coverage for one year or less to residents in the UK. Policies can offer coverage for as little as one day and ensure that loved ones are paid if the unexpected happens within a certain period.

It should not be confused with ‘fixed-term’ life insurance, which is provided by companies for a set number of years (usually one to five).

This type of insurance will not replace an existing long-term life insurance policy and won’t act as a cheaper alternative. One appealing factor, however, is that it can usually be obtained quickly, which is perfect for those in need of coverage at short notice.

Short term life insurance

There are a variety of specific reasons when getting short-term life insurance makes sense, which we’ll get to later on in this article.

There are a variety of specific reasons when getting short term life insurance makes sense, which we’ll get to later on in this article.

How does it differ from long-term life insurance?

The first clear difference is the coverage period. Most long-term life insurance policies will offer coverage for a period of 1 to 40 years, whilst short term life insurance will only cover periods of less than one year.

Long-term policies can also take longer to obtain, as there is an investigation period where a medical exam may need to be conducted to correctly assess health liability.

In contrast, a short term life insurance policy can be obtained quicker, usually in a matter of days or weeks, since there’s a known risk that justifies getting the policy in the first place. The underwriting process is also usually less rigorous, which adds to the efficiency of the service.

When does getting short term life insurance make sense?

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There are a variety of reasons why getting a short term life insurance policy makes sense. Perhaps the most common of these reasons is when there is a gap in a long-term life insurance policy.

This can be during the underwriting period of a new policy, or when changing jobs and coverage is no longer provided by the previous employer.

In these situations, the existing long-term insurance provider will usually offer a short term policy to cover this gap. It can be beneficial to accept this offer to save time but could be more costly if there’s a better deal on the market.

Here are some other typical examples of when short term life insurance is beneficial:

  • When visiting a country or location of added risk that’s not covered by a long-term policy, such as a warzone or area with a particularly high crime level.
  • When taking part in extreme sports or dangerous activities that pose a life risk, such as extreme mountain climbing, deep-sea diving, cave exploring, scuba diving, or motorsport track day.
  • When needing to cover a short term loan or debt.
  • In these situations that might not be covered by a normal long-term life insurance policy, short term life insurance can ensure that loved ones are protected should the unexpected happen.

Who can get short term life insurance?

Generally speaking, anyone up to the age of 70 can get short term life insurance, however, various factors could influence a provider’s decision.

Most of these are usually linked to health, such as current state of health and lifestyle, family health history, and dangerous habits (such as smoking).

The positive side is that these checks tend to be a lot less rigorous when compared to a long-term insurance policy, which allows for quicker approval.

Is short term life insurance more expensive?

The cost of short term life insurance policies will vary depending on a range of factors. This includes the nature of the reason behind wanting the policy, age, health condition and lifestyle.

Since short term policies are usually requested for periods when the risk to life is increased, the cost tends to be a lot higher than a long-term policy. This is why a short term policy should be used to supplement long-term insurance and provide some peace of mind in situations where normal life insurance doesn’t do the job.

Note that using this type of policy as a main life insurance policy is not advisable, not to mention costly.

What to look out for when looking for short term life insurance

Like all insurance policies, there are certain things to look out for when buying short term life insurance coverage.

Since insurance premiums for this type of policy are usually high, it’s important to get a range of quotes to compare and find the best deal. Note that a provider with experience in offering short term life insurance is always a safer bet.

Policyholders should also ensure that coverage takes into account all risk factors they want to be included and should check if they’re happy with the factors that are left out.

Is short term life insurance worth it?

Although not as popular a product as long-term life insurance, a short term policy is a beneficial tool that can provide peace of mind and an extra layer of safety in particular situations. If the unexpected were to happen it’s always reassuring to know that family and loved ones are protected.