Long-Term Vs Short-Term Health Insurance: Which One Should You Buy?

You probably know that regular health insurance policies are available for a period of one year. However, short-term health insurance plans are those that are valid for less than 12 months, usually they have a policy tenure of between 3 to 6 months.

These plans cover essentials during an emergency like hospitalization, ICU charges, and ambulance costs, and do not have a large premium. Thus, it is a good option for those looking to fill a temporary gap in health coverage, for example between jobs, or while in the process of porting their main health insurance policy. It is also beneficial for Non-Resident Indians (NRIs) and students who require coverage for short periods of time.

Another type of short-term health insurance is specific plans that cover specific health issues for a set period of time, usually up to 9 months, such as the Corona Kavach Policy and the Corona Rakshak Policy issued to cover treatment for COVID-19.

As the name suggests, a long-term health insurance plan is one that offers coverage for a longer period of time than a regular health plan. It is valid for multiple years, usually between 2 to 5 years.

Such policies usually offer more comprehensive coverage, often including critical illnesses and maternity benefits, but they tend to have a higher premium. This is a good option for those who have the ability to invest in health insurance where you don’t need to worry about renewal for a longer duration.

Apart from providing coverage for most major health insurance expenses, a short-term health insurance plan comes with certain advantages and disadvantages.

Pros of Short-Term Health Insurance

• Lower Premiums – these plans are valid for a shorter duration of time, and thus offer coverage at a more affordable premium.
• Cumulative Bonuses Available – insurance companies offer benefits like cumulative bonuses on short-term health insurance plans as well.
• Good Stop-Gap Option – this is a good option for those who are between employee healthcare plans, or individuals visiting the country for a brief duration.
• Easy to Switch Between Insurers – since the turnaround time is shorter, it is easier to switch insurers if you are unhappy with your current company.
• Tax Benefits – with short-term health plans, you will be able to avail yourself of tax benefits under Section 80D of the Income Tax Act.

Cons of Short-Term Health Insurance

• Needs Frequent Renewals – such plans need to be renewed frequently if you don’t wish to forfeit the benefits like a cumulative bonus.
• Overall Cost is Higher – in the longer term, the premium for a short-term plan can end up being more than those on regular annual premiums, or long-term health plans.
• Pre-existing Diseases Not Covered – these plans usually do not cover pre-existing conditions or diseases.
• Cannot Customize – you cannot customize these plans with add-on covers, such as maternity benefits.

While long-term health insurance plans provide wider coverage for health emergencies, they also come with some advantages and disadvantages.

Pros of Long-Term Health Insurance

• Longer Policy Period – you can enjoy the benefits of the protection of the health insurance policy for a longer duration
• No Need for Frequent Renewals – you don’t have to worry about frequently renewing your health plan every year, nor worrying about forgetting to renew it and having the policy lapse.
• Discounted Premiums Available – many insurers will offer a discounted premium when you opt for a long-term health insurance plan.
• Cover Pre-Existing Diseases – usually a long-term health insurance plan will cover pre-existing diseases, after a waiting period of 3 years.
• Can Customize the Policy – you will have the option to customise your health insurance with add-ons, such as critical illness cover, maternity and newborn cover, and consumable cover.
• Tax Benefits – as with other health insurance plans, you will get tax benefits and returns under Section 80D of the Income Tax Act.

Cons of Long-Term Health Insurance

• Higher Premiums – you will need to pay a higher premium amount at once as a lump sum, which may be difficult for some.
• Porting Policies is Harder – since the policy period is longer, porting the policy to a new insurer will take longer, and may be a more difficult process.
• May Not Cover Seniors – some insurance companies may not cover senior citizens under long-term health insurance plans.