Short-Term Health Insurance Plans – Use Them To Your Benefit

In India, most often, health insurance takes a backseat when compared to other essential elements of financial planning, such as savings, investments, insuring property, and more. But think about it, what could be more important than a person’s health and wellbeing?

Statistics show that Indians are prone to cardiac illnesses, diabetes, and hypertension at a much younger age; young professionals in the age bracket of 25 years and 35 years are increasingly suffering from these illnesses. Meanwhile, the coronavirus pandemic has been a cause of worry for everyone. Scary, isn’t it? 

The impact of rising ailments and the pandemic has been clearly seen on short-term health insurance. It is one of the ways in which people are preparing for health uncertainties.

However, selecting the right kind of health insurance is always tricky. Different people have different needs based on budget, coverage requirements, duration, and other factors. Oftentimes, people aren’t sure about the health insurance policy they must buy and want to avoid buying a bad plan that won’t meet their needs. A solution – buying short term health insurance plans. Let’s look at all the factors of buying short term health insurance.

• What is short term health insurance?
• Key features of short term health insurance
• How does short term health insurance work?
• Is short term health insurance worth it?
• Short term health insurance to cover COVID-19
• Key features of COVID-19 health insurance
• Who should buy short term COVID-19 health insurance plans?

 

What is short term health insurance?

Short-term medical plans are those with a shorter period validity – 3, 6, or 12 months. Short-term health insurance plans have to be renewed at the end of its policy period. Typically, health insurance policies have to be for a minimum duration of 12 months and a maximum of 3 years.

 

Key features of short term health insurance

Short-term health insurance plans have mostly the same features as long-term insurance plans, barring some features of coverage and pricing.

• Shorter duration (12 months)
• Have to be renewed at the end of the policy period
• Provide no-claim bonus if renewed regularly
• Can be ported to another insurer or plan
• Are more flexible because changes can be made at every renewal
• Typically, do not cover critical illness, maternity, pre-existing diseases because of its short duration
• The premiums are lesser compared to long-term policies

How does short term health insurance work?

Simply put, short term health insurance is insurance that is for a limited period. Think about a temporary solution to cover a few months to a year. It can be bought to cover unexpected illnesses. Because the duration is short, the premium for short term plans is usually lower and hence more affordable to many. However, it is essential to understand the pros and cons.

Pros

• The premium of short term plans is affordable as the duration is lesser and the risk factor for the insurance company is lesser
• It provides tax benefits under Section 80D. Professionals who have a group health insurance from their employers can avail of tax benefits by buying a short-term, affordable health insurance plan
• It has coverage features similar to long-term plans, barring some features that require longer waiting periods
• More flexibility for portability as one doesn’t have to wait for a longer duration
• Policyholders can change the sum insured at the time of annual renewal
• Policyholders can benefit from no-claim bonuses every time they renew the policy
• It can help cover professionals who are in-between jobs and without a group health insurance coverage
• Getting a short-term policy is faster compared to long-term plans
• Short-term plans can work as proof of insurance in cases where it is mandatory, e.g. travel

Cons

• May not be eligible for any discounts on premium, as insurers offer discounts for long-term purchases
• May turn out to be more expensive compared to long-term plans
• Short term plans most often do not cover maternity and critical illness or pre-existing diseases
• Short-term insurance plans have lesser guarantees compared to the long-term. Insurers can reject the renewal application

 

Short term health insurance worth it – 5 reasons

Whether or not short term insurance is beneficial to a person would depend on the individual requirements of the person. It can be beneficial in certain circumstances, like these:

It’s a good solution for temporary coverage 

These plans can be particularly beneficial for those who need short-term insurance solutions. E.g. those who are in between jobs and out of health insurance offered by employers, or those who are visiting the country for a short duration and may need temporary health coverage.

Affordable for those with a small budget

Many people may understand the importance of health insurance but may not be able to afford it. The best solution: short-term health insurance plans are affordable as they have lesser premium compared to long-term policies.

For those who want a quick approval

Short-term plans are usually faster. Those who are in a hurry to have health insurance as proof for documentation or other purposes could choose short-term plans. Usually, short-term plans may not require pre-policy health check-ups.

Good for those who are in India for a short duration

Think about NRIs who may be visiting. These plans turn out to be beneficial for those visiting India for short durations. 

For flexibility

Short-term plans provide more flexibility compared to long-term plans. A policyholder is bound for a lesser duration and can change the plan at the time of annual renewal, or also choose health insurance portability. 

 

Short term plans for COVID-19

The coronavirus pandemic has caused fear and concern over healthcare requirements. A large number of people are unaware that their general health insurance plan would provide coverage towards hospitalization for coronavirus. However, conditions could apply depending on the types of policies and clauses in each policy.

Recently, the IRDAI allowed insurers in India to provide short term health insurance plans to cover COVID-19. These plans are for a duration between 3 months and 11 months. These plans will specifically help uninsured people to get coverage and immediate relief. 

Key features of COVID-19 health insurance

• There are two types of COVID-19 health insurance plans – indemnity basis and benefit basis
• The plans can be bought for individual or as a family floater
• Policy period: 3 months to 11 months
• Sum insured: Rs 50,000 to Rs 5 lakh
• Premium payment: single premium
• Age: 18 years to 65 years
• Renewability: lifetime

Corona Kavach Health Insurance: 29 insurance companies in India are providing Corona Kavach Health Insurance. Among these insurers are Tata AIG, Bharti AXA, Max Bupa, HDFC Ergo, ICICI Lombard, and Oriental Insurance. The policy can be bought for a duration of 3.5 months, 6.5 months, or 9.5 months. The plan can be bought at the cost of a premium of Rs 447 to Rs 5630, depending on factors such as age, the sum assured, and the policy period.

Who should buy a COVID-19 health insurance plan?

Short term COVID-19 health plans are most useful for those who do not have a general health insurance plan or medical insurance. This is because the COVID-19 plan can provide the much needed temporary health coverage required during these uncertain times. 

 

To sum it up

Both, short-term and long-term health insurance has their pros and cons depending on individual requirements. Given the rate of increasing illnesses and lifestyle diseases, it may be wise to go for a long-term insurance plan in order to avail of all the benefits. However, those who prefer short-term policy could renew it annually year-after-year to ensure that they can get all the benefits.