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How to Choose Between Long-Term and Short-Term Health Insurance?

Buying a health insurance policy has become a priority these days, but with so many different types of health insurance out there today, it can be difficult to know which coverage to choose.

Two important types are long-term and short-term health plans. It is very important to understand how both of these work, and the differences between them. This will help you make a more informed decision about which type of health cover you wish to buy.

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What is a Short-Term Health Insurance Plan?

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.

What is a Long-Term Health Insurance Plan?

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.

The Difference Between Short-Term and Long-Term Health Insurance Policies

Particulars	Short Term Health Insurance	Long Term Health Insurance
Policy Period	Less than 1 year	More than 1 year
Premium	Lower when compared to long-term health insurance	Higher than short-term health insurance
Coverage	Specific expenses are covered, ex. hospitalization for a particular illness	Covers hospitalization for a wide range of illnesses and treatments, as well as various other benefits.
Pre-existing Conditions	Usually not available	Available
Add-on Covers	Usually not available	Available
Suitable for	People who are looking for short-term coverage, ex. NRIs or international students, or coverage for specific illnesses like COVID-19.	People looking for long-term protection or comprehensive coverage.

What Are the Pros and Cons of Short-Term Health Insurance?

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.

What Are the Pros and Cons of Long-Term Health Insurance?

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.

Conclusion

Now that you know more about these two types of insurance policies, and their unique benefits and disadvantages, you can tell the difference between short- and long-term insurance. Thus, it should help you to make a more informed decision when choosing the best health insurance for you and your family so that you are financially protected against any medical emergencies.

Note: Digit Insurance does not currently offer long-term health insurance plans.

Frequently asked questions

All

Who should buy a short-term health insurance policy?

Short-term health insurance plans are a good option for those looking to fill the temporary gap in health coverage. For example, those between employers' healthcare plans, or individuals visiting the country for a brief duration like Non-Resident Indians (NRIs) and students.

When should you buy a long-term health insurance plan?

A long-term health insurance is a good option for those who wish to invest in a health insurance that offers a wide range of coverage, where you don’t need to worry about renewal for a long duration.

Do long-term health insurance plans have more coverage more than short term plans?

Generally, yes. Long-term health insurance plans offer wider coverage, including the option to customize the plan with add-on covers such as critical illness covers, and maternity benefits.

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