6 Times Short-Term Life Insurance Is Worth It – If you’re in a period of transition whether switching jobs, working to improve your health, or paying off a debt, a short-term life insurance policy can provide the protection you need during that time. It offers a flexible way to stay covered without committing to a long-term plan.
Life insurance doesn’t always have to be a permanent decision. Short-term or temporary coverage can be a smart option when your current situation is likely to change, giving you peace of mind while you focus on what’s next.
How Does Short-term Life Insurance Work?
There are two types of short-term life insurance: annual renewable term, or ART, and temporary life insurance.Short-term life insurance generally comes in two forms: annual renewable term (ART) and temporary life insurance.
Annual renewable term life insurance is a policy that lasts one year and can be renewed each year for a limited time. You do not need to reapply or take another medical exam. It works like a one-year agreement. When the year ends, you can choose to keep the coverage or end it.
Some companies offer temporary life insurance to people who are waiting for approval on a traditional policy. The approval process for standard term or permanent life insurance can take four to eight weeks. Temporary coverage helps ensure you are not left unprotected during that time.
When To Get Short-term Life Insurance
1. You’re waiting on a long-term life insurance policy
If your provider offers temporary coverage while you apply for a full policy, it is usually a smart choice. Coverage begins after your first payment. The benefit amount often matches what you are applying for, although some limits may apply based on your age or health.You
2. You Want to cover a short-term debt
This includes things like credit cards, personal loans or a mortgage that is almost paid off. A short-term policy can cover those debts and prevent your family from inheriting the responsibility.
For new business owners, ART can also help. If you’ve borrowed money to get started, this type of policy can protect your family from having to deal with business debts.
3. You’re between jobs
Many people receive life insurance through their employer. If you are between jobs and need to fill the gap, ART can help. Once your new job starts and you qualify for group life insurance, you can end the short-term plan.
4. You’re temporarily working a dangerous job
Some jobs carry more risk, and insurers may raise your rates. If you are working a high-risk job for a short time, such as in construction or logging, a short-term policy can be a better fit. You can apply for a lower-rate policy later when the job is done.
5. You’re improving your health or lifestyle
If you are losing weight, recovering from an illness, quitting smoking or working on your health, a short-term policy offers protection while you work on those changes.
Once you reach your health goals, you may qualify for a better rate on a standard policy.
6. You have other short-term life insurance needs
You might need coverage for a legal reason, such as a divorce agreement. Or your rates for traditional coverage may be high due to a current health issue or probation. In these situations, short-term coverage offers a temporary solution without locking you into a long-term policy.
What are the disadvantages of short-term insurance?
Short-term life insurance often becomes more expensive over time, does not build cash value, and may offer limited coverage compared to long-term policies.
How long can I have short-term insurance?
You can typically keep short-term life insurance for one year at a time, and some policies allow annual renewals for several years, depending on the insurer and your eligibility.
What is the best length for term life insurance?
The best term length depends on your needs, but many people choose 10, 20, or 30 years to align with major financial responsibilities like mortgages or raising children.
What happens to the money you put into term life insurance?
If you outlive your policy, the premiums you paid do not get refunded, since term life insurance does not build cash value or savings.
