Team AckoNov 17, 2023
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.
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.
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:
|Parameter||Short Term Health Insurance||Long Term Health Insurance|
|Policy Period||3 to 6 months||More than one year|
|Cost||Low as compared to a long term plan||High as compared to short term insurance|
|Renewability||Upon expiry i.e. within 3 to 6 months||Upon expiry i.e. after one year|
|Coverage for Pre-existing conditions||No||Yes|
|Option to buy Add-ons||Unavailable||Available|
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.
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:
A non-residential Indian visiting for a short duration: He/she can avail medical insurance coverage against injuries, diseases, etc.
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.
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
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:
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.
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.
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.
Buying a short term insurance plan has the following disadvantages:
A short term plan needs frequent renewals.
The overall premium paid is more than the premium for a long term policy for the same duration.
The policyholder does not have the option to customize as much insurance coverage as compared to a long term plan.
The coverages of a short term health insurance policy depend upon the insurance company. Usually, the following things are covered:
Hospitalization: Expenses related to hospitalization such as bed charges, doctor visits, medicines, room rent, cost of surgeries, operation theater charges, etc.
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.
Expenses related to organ donation: Some insurance companies may cover the cost of undergoing surgery for organ donation.
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.
Pre and post hospitalization: A planned surgery may require treatment before or after getting hospitalized. These charges are covered under a short term policy.
The easiest way to compare short term health insurance policies is to go online and use a comparison tool. This tool is available at any of the insurance company's or broker's websites. Select health insurance plans that interest you and click on compare. You will see a direct comparison between coverages, added benefits, and premium of health plans.
Yes, one can get a tax benefit for buying a Long Term Health insurance plan under Section 80D of the Income Tax Act.
Since the policy period of a short term plan is less than that of a conventional health insurance policy, the cost is also less.
The cost of a long term health insurance policy depends upon the exact duration of the policy period, type of policy, number of inclusions, add-ons, number of people insured, and the sum insured.
Yes, some insurance companies may offer more coverage and benefits for a long term policy as compared to a short term health plan. You can check the coverage of the policy in a document called the Policy Wordings.
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