Long Term vs Short Term Health Insurance: Which one should you choose?

Growing medical costs mean that if you or your family member is in an unfortunate situation where medical treatment or hospitalisation is required, the expenses are bound to eat a large chunk of your hard-earned savings. One way to avoid this financial pitfall is by getting a comprehensive health insurance policy that covers you and your family. A health insurance policy covers medical expenses caused by hospitalization, surgeries, treatment, ambulance, etc. This is done either via reimbursement or is directly paid by the insurer.Health insurance gives you a financial cushion to fall back on if sudden medical expenses arise. Rather than liquidating your financial assets like stocks , mutual funds , fixed deposits or borrowing money, you can rest assured that your health insurance will cover the medical expenses.When you decide to purchase health insurance, you may come across various health plans with different tenures and benefits. In this blog, we’ll discuss the key differences, advantages, and disadvantages of health insurance plans with a shorter as opposed to a longer tenure.

A health insurance plan with short tenure, usually a year or less, is termed Short Term Health Insurance, whereas one with a longer tenure of more than a year is termed Long Term Health Insurance. Both have their own benefits. Let us look at each of them in detail.

A long term health insurance plan can keep you insured for a longer period of one or more years. This means that you do not have to renew the policy frequently. You can purchase a long term health plan and relax, knowing that you are protected financially for the next 2-3 years, depending on your policy tenure. This is the most common type of health insurance plan that policy buyers purchase, usually with a tenure of one year.

1. Policy term:

Policy term can be a minimum of one year but also 2 or even 3 years. Insurers may also give good deals on longer tenures by decreasing the total premium.

2. Premium:

Premiums for long term plans are higher as compared to short term plans. However, do note that the premium is based on many factors like pre-existing illnesses, age, and health of the policyholder.

3. Pre-existing illnesses:

Pre-existing illnesses are also covered in long term health plans, but they may be covered only after the specified waiting period. Read the policy document carefully to understand the waiting period.

4. Add-ons:

Add-ons are additional benefits that can be purchased on top of your existing health plan. Long term plans allow you to get add-on covers like critical illness insurance, accidental cover, etc.

Short term health plans are designed to provide health benefits for a shorter duration of 3-6 months, for example. Such policies require renewal after the short term is up. Hence, you will have to renew the policy frequently. A short term plan is designed to provide health cover during a transitory phase.

1. Policy term:

It is usually 3 to 6 months.

2. Premium:

Premiums for short term plans are comparatively lower since the tenure itself is so short.

3. Pre-existing illness:

Pre-existing illnesses are usually not covered in short term plans unless specified otherwise. Some insurers do provide coverage for pre-existing illnesses in their Covid Protection plans.

4. Add-ons:

Add-ons are usually not available in short term health plans.

The Covid-19 pandemic has made people understand the importance of a health insurance policy. Hence, the popularity of short term plans shot up. People looking for short term protection from Covid-related expenses can opt for these plans. Short term health insurance policies are also helpful in the following scenarios:

• When changing jobs, employer’s group policy ceases to exist, and till you find a new job and health insurance, a short term plan can provide continued health coverage.
• When porting from one insurer to another, a short term plan can fill in the gaps of health coverage during the period.

A long term health plan should be purchased by everyone looking to protect themselves from medical expenses. Short term plans can help fill in gaps between long term plans. But long term health plans are a must in these testing times.