Which is better? Short Term or Long Term Health Insurance?

Medical emergencies can put a financial strain if adequate funds are not planned for it. This can be especially unfortunate if you are diagnosed with a critical illness. In the absence of insurance, it can be burdensome to address the costs of treatment and recovery. A good health insurance cover ensures you are economically secured during unforeseen medical events in your life. Fortunately, times are changing, and people in India are warming up to the concept of health insurance.

When choosing a health insurance plan for yourself, you realise you are baffled by the vast array of options. At a basic level, health insurance plans can be broadly categorised into short term health insurance and long term health insurance plans. This article can help you evaluate both ends of the spectrum and make an informed decision.

What are Short Term Health plans?
Short term health insurance policies have a validity period of up to 12 months. These plans are specifically designed to cover medical expenses because of unanticipated events like fires, illness, accidents, etc. After the policy period expires, you must renew the plan else the ‘No Claim Bonus' can be forfeited. Generally, people who don't wish to pay higher premiums for long term health insurance opt for short term health insurance.

Advantages of Short Term Health Plans

Following are some benefits you can avail on purchasing a short-term health plan:
• Short term insurance plans have lower premium as their policy period is lesser than long term plans. So, most people can afford them.

• As long as you pay your annual renewal premiums on time, the advantages of short term insurance are equivalent to long term insurance.

• The insured can enjoy tax benefit under Section 80D of the Income Tax Act.

Disadvantages of Short Term Health Insurance

Following are some cons of investing in a short term health plan:
• If you don't pay your annual premiums on time, the right to ‘No Claim Bonus' gets forfeited.
• Short term insurance does not cover pre-existing medical conditions or diseases.
• Most short term plans do not provide any cover for maternity claims.
• Even though short term insurance offers lower premiums, in the end, they can be more expensive. This is because insurance companies offer high discounts for people opting for long term insurance plans.

What are Long Term Health Insurance Plans?
Long term health plans have a policy period of two to three years, unlike a regular one-year short term health plan. So, while a short term policy may require annual renewal, a long term policy keeps you covered for 2 to 3 years. Since these plans offer a longer tenure, they are medically underwritten. This means you are required to answer various health questions to ensure you are qualified for coverage.

Advantages of Long Term Health Insurance Plans

Following are some benefits of investing in long-term health insurance plans:
• The insured is not required to renew their policy every 12 months.

• You stand to gain from substantial discounts in premiums.

• Long term health plans cover you for a tenure of 2 to 3 years which saves you from any kind of rate revisions in premiums during that period.

• Pre-existing diseases are covered under long term health plans, unlike a short term insurance plan.

• Some insurance companies charge lesser premiums for younger health insurance seekers.

• Long term health plans can also help you save tax under Section 80D of the Income Tax Act.

Disadvantages of Long Term Health Insurance Plans

Some difficulties with long-term health insurance plans are listed below:
• Senior citizens are not covered under long term insurance plans offered by most insurance companies.

• Many insurance seekers may not be able to afford lump sum payments as premiums for long term insurance plans.

What Should You Choose? Short Term or Long Term Plans?
Selecting the right insurance is a matter of insight. If you are a young individual with no medical history, you can opt for a short term health insurance plan. But as you grow older, investing in long term health plans seems more feasible.

Conclusion
No matter the health insurance plan you opt for, it is a good idea to research insurance companies carefully. Consider their records of accomplishment for any complaints and take the time to understand the policies you are interested in. Decide how much you can pay for your health needs and calculate the coverage you will need before selecting the best plan for yourself.