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Features
Ref. No. KLI/22-23/E-BB/492
Short-term insurance is an interim support for life. In contrast, long-term insurance provides lifetime coverage which ends either on maturity or death.
Life insurance is not an expense but an investment for the future. It helps sail through tough times without worrying about sudden out-of-pocket expenses. Short-term and long-term insurance plans have their own advantages, which can be availed depending on the circumstances.
Humans cannot control every life event, and emergencies arrive uninformed. To plan the future better, insurance plays a vital role. It provides coverage against uncertain life events like theft, demise, damage to belongings, etc. With the right amount of premium, you can provide yourself and your loved ones with appropriate benefits in tough times of life. It not only protects your savings but also ensures stress-free living. In this blog, we will discuss short-term and long-term insurance with their respective benefits.
As the name suggests, short-term life insurance is bought for a specific purpose for a short time period which is less than 5 years. It is important to note that it is a temporary life insurance plan whose benefits can be availed till a certain time period. The most common use of such a policy is when you are traveling and want to have an additional layer of coverage. The situations when short-term life insurance may be suitable include the following:
As life is uncertain, covering yourself and your loved ones under an insurance plan is always a great idea. If you want coverage for a short duration, then there are a variety of plans to choose from with the following major features:
Short-term insurance plans are affordable and come with cheaper premiums as compared to other types of insurance plans.
Most insurance companies offer rebates if you opt for a higher sum assured. For example, non-smokers get a rebate; as such, people are less exposed to some of the deadly diseases.
Term plan gives flexibility in paying a premium. Most of the insurers give the option of paying premiums annually, semi-annually, Quarterly or monthly.
Long-term life insurance gives protection to your life or your ability to earn an income for a longer period of time which may be even beyond 30 years. You need to pay a particular amount of premium every year against the coverage provided. The benefits involve lump sum cash payment or a monthly income in case of serious illness or disability.
Long-term insurance serves the purpose if you are looking to cover your loved ones against all adversities. Here are some salient features of a long-term insurance plan.
Long-term insurance provides coverage of up to 50 years. You can be stress-free once you enroll in the plan.
You can avail yourself of rider benefits such as income benefit rider, accidental permanent disability and critical illness rider.
If you do not wish to burden your loved ones with existing loans, a long-term plan will help you sail through unfortunate events.
Buying life insurance has now become the priority in everyone’s life, especially after COVID-19. The disease has made everyone more conscious about health and health-related decisions. One such major decision is . To simplify your search, mentioned below are the difference between both types of insurance.
Basis |
Short-term Insurance |
Long-term Insurance |
Duration |
The coverage period typically ranges from 1 to 10 years |
The coverage period can be up to 30 years or more |
Premiums |
Premiums are generally lower due to the shorter coverage period |
Premiums are usually higher due to the more extended coverage period |
Coverage |
Can be useful for temporary coverage needs, such as paying off a mortgage or other debts |
Can provide more comprehensive coverage for long-term financial needs, such as income replacement or college tuition for children |
Benefits |
May be renewable for another term or convertible to a permanent policy |
Often includes a cash value component that can be borrowed against or used for other financial needs |
Choosing the right term insurance plan is a tough task. There are many insurance companies in the market that offer different plans, and you must select according to your needs. The best way to select the plan is by comparing various features and benefits. Here are some points that should be considered while selecting a plan:
The cost of the policy is a significant factor to consider. It involves comparing the cost of the premium with the benefits it provides. You must choose a plan which provides maximum benefits with an affordable premium.
Every plan has exclusions and inclusions. Generally, policies come with a waiting period for your existing disease. The waiting period might last from a few months to a year. You need to consider a plan which has your existing diseases in the inclusion section.
With the increase in age, risk also gets increases, which is why the premium gets increased. The premium is directly proportionate to the age. If you have senior citizens at home, you should select a policy that provides benefits in old age, such as daycare facilities, coverage for critical illness, etc.
Buying a policy requires an evaluation of your finances and needs. In every phase of life, the situation changes and so is the coverage needs. As Every individual has different needs and financial obligations for the future, you must evaluate your needs and buy a plan accordingly.
Insurance is not a new concept for most of the people in India. The benefits of the insurance policy have been availed by many families and individuals, and it provides financial support in the times they need it the most.
With options like short-term insurance plans and long-term insurance plans, you can prioritize the important aspects of your life. From providing coverage for your assets to serving as a saviour for the family in case of the demise of the policyholder, insurance has always been a resource to rely on. To utilize this resource, you must make a wise purchasing decision and give a gift of insurance to your family.
Amit Raje is an experienced marketer who has worked in various Fintechs and leading Financial companies in India. With focused experience in Digital, Amit has pioneered multiple digital commerce in India. Now, close to two decades later, he is the vice president and head of the D2C business department. He masters the skill of strategic management, also being certified in it from IIMA. He has challenged his challenges and contributed his efforts in this journey of digital transformation.
Prasad Pimple has a decade-long experience in the Life insurance sector and as EVP, Kotak Life heads Digital Business. He is responsible for developing user friendly product journeys, creating consumer awareness and helping consumers in identifying need for life insurance solutions. He has 20+ years of experience in creating and building business verticals across Insurance, Telecom and Banking sectors
Features
Ref. No. KLI/22-23/E-BB/2435
The information herein is meant only for general reading purposes and the views being expressed only constitute opinions and therefore cannot be considered as guidelines, recommendations or as a professional guide for the readers. The content has been prepared on the basis of publicly available information, internally developed data and other sources believed to be reliable. Recipients of this information are advised to rely on their own analysis, interpretations & investigations. Readers are also advised to seek independent professional advice in order to arrive at an informed investment decision. Further customer is the advised to go through the sales brochure before conducting any sale. Above illustrations are only for understanding, it is not directly or indirectly related to the performance of any product or plans of Kotak Life.
