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If you're looking for life insurance, you've probably come across short-term life insurance. This type of policy may be a good choice if you only need cover for a limited period, such as paying off a specific debt or starting a new business.
What is short-term life insurance?
Short-term life insurance is aterm life insurancepolicy. Short-term life insurance offers a fixed rate for a fixed period of time (for example, once a year), although some companies offer short-term policies for up to five years.
Short-term life insurance is typically used to fill a gap in coverage while waiting for a long-term policy to start, or to provide protection during a life change phase.
How does short-term life insurance work?
A short-term life policy works like any other policyTypes of life insuranceYou pay a premium in exchange for a policy covered by insurance. Your beneficiaries will receive a Death Benefit in the event of your death for as long as the policy is in effect. The main difference is the duration of the policy, but there are other differences as well.
- period.Short-term policies usually last for one year, but some policies last for up to five years. Traditional life insurance policies are usually concluded for 10, 15, 20, 25 or 30 years.
- premia.Premiums are usually higher thanpermanent life insurancepolicies because they do not contain a monetary value component. As with traditional term life policies, the premiums for short-term policies remain the same for the life of the policy. If your policy is renewable, your premiums will increase significantly each time you renew your policy.
- renew.Whether a policy is renewable depends on the type of short-term life insurance you have.
- Insurance.Short-term policies often have simplified application and approval requirements, so you may not need to undergo medical examinations or provide extensive health information.
What are the different types of short-term life insurance?
Any life insurance can be short-term if you decide you no longer need the coverage and stop making payments. However, if your insurance needs are short-term, it is often more cost-effective to purchase a policy specifically designed for a shorter period.
Below are some common types of short-term life insurance.
- One year renewable regular life.It gives you the flexibility to renew your coverage every year while still requiring coverage. This can be a good option if you think you only need 12 months of coverage but would like to be able to extend your policy if necessary. Prices will increase with each renewal.
- Term life insurance for one year.The policy is valid for 12 months and is not renewable. If you need protection after one year, you need to buy a new policy. Progressive (from Fidelity Life), Brighthouse andmainOne-year life insurance policies are available.
- Life insurance for five years.While many insurance companies have terms starting at 10 years, some offer five-year life policies. For example,paradise of lifeIt offers a five-year life insurance option under the Haven Simple policy.
Annual life insurance with the possibility of extension
Annual renewable life insurance policies provide one year of coverage with the option to renew the policy every year. Premiums increase every year, but if you need short-term coverage and want the flexibility to renew each year, these policies may be a good choice.
Seller of annual renewable life insurance
If you're looking for companies that offer annual renewable life insurance, this list is a good place to start:
- US Citizens - ANICO Signature Policy for ART
- fair– art policy
- New York life– Annual policy with the possibility of extension
- Ohio State - YRT Plus II Policy
- Securian Financial – policy with the possibility of replacing the annual renewable (CART).
- USAA - basic terms rules
Pros and cons of short term life insurance
Before purchasing a policy, consider the pros and cons of short-term life insurance.
- affordability.Short-term life insurance policies tend to be less expensive than permanent life insurance policies because they generate no cash value and have a shorter lifespan. However, if you have a short-term renewable policy, premiums can add up quickly if you choose to renew every year.
- Premia.In most cases, with an annual policy, you pay an annual premium in advance. You don't have to worry about your policy losing its validity due to late payments.
- Quick acceptance.Short-term life insurance policies are usuallySimplify the issuance of life insurancewhich means you can get your insurance approved quickly.
- It can be expensive.The premiums you pay for your policy depend on your age at renewal. So if you misjudged your insurance needs and ended up renewing your coverage every year, it may be more cost effective to purchase a long-term life insurance policy (for example, 10 years or more).
- Not always renewable.Some types of short-term life policies are not renewable at all. Others may have a renewal limit. For example, Equitable offers two short-term policies: a three-year annual renewable policy and a one-year non-renewable policy. Ohio National Bank's short-term policy covers a period of 10 years.
- No cash value.Short-term policies do not accumulate monetary value over time. This means that you cannot borrow money or use it to accumulate cash, as with a policycash value life insurancepolicy.
How much does short-term life insurance cost?
For non-smoking men aged 30 to 32 and women aged 39 to 41, you can get a $50,000 annual life insurance policy from Progressive (via Fidelity Life) for as little as $7 a month. If you are younger, the policy may be cheaper.
There are several factors that affect the fee for short-term life insurance.
- age.The younger you are, the lower your premium.
- Insurance amount.The more insurance you need, the higher your premium will be.
- healthy.If you are healthy, you can get a lower rate. However, if you have a pre-existing illness, you may pay higher premiums or lose coverage altogether.
When does short-term life insurance make sense?
In such cases, short-term life insurance may be worthwhile.
- You are between two jobs.If you're in the middle of a job change and don't have insurance, short-term life insurance can provide coverage until you find a new job with group coverage or take out insurance yourself.
- You make positive lifestyle changes.If you're quitting smoking or making lifestyle changes to improve your health (and life insurance rates), a short-term policy may offer protection until you're ready to purchase a long-term policy.
- You need short-term debt insurance.If you have specific needs for life insurance that provides temporary debt protection, short-term life insurance may be a good choice.
How to choose short-term life insurance
Consider these factors when purchasing short-term life insurance.
- Insurance amount.Make sure your policy provides the amount of coverage you want. Even short-term life insurance policies may have a minimum coverage of $100,000 or more.
- Cover length.Decide how long you need cover (whether it will be one year or a maximum of five years) and then choose a policy that fits that timeframe.
- cena.Find the cheapest option that suits your insurance needs.
- Renewable.Check whether the policy is renewable and whether there is a limit on the number of renewals.
Which companies offer short-term life insurance?
You can find short-term life insurance policies in these companies.
- Progressive and faithful life - RAPIDecision Life One
- Brighthouse - one-year term
- main– a period of one year
- fair– TermOne policy
- paradise of life– A simple five-year policy
Compare life insurance companies
Compare policies from 8 leading insurance companies
temporary life insurance
temporary life insuranceUnlike short-term life insurance, it is designed to fill gaps in coverage while you wait for another policy to be approved.
When you apply for life insurance, the insurance company will usually ask you to undergo a medical examination and provide other information about your health and lifestyle. This process can take weeks or even months, and you may not have any insurance during that time.
To address this coverage gap, some insurance companies offer temporary life insurance that provides coverage for a limited period (e.g. 30 or 60 days) pending approval.
Frequently asked questions about short-term life insurance
What is the difference between short-term life insurance and long-term life insurance?
long-term policy - egall life insurance- Often more features such as options to build monetary value and add passengers. In most cases, short-term policies only provide a guaranteed death benefit and nothing else.
Can short-term life insurance pay out?
No, a short-term life policy has no cash value and therefore cannot be withdrawn. These rules are intended to ensureLife insurance death benefitYour beneficiaries if you die during the policy period. If you exceed the policy term and do not renew it, your cover will expire and you will not receive any benefits.
Is it worth buying short-term life insurance?
If you need short-term coverage, you may want to consider short-term life insurance. For example, if you have a mortgage or other debt that is about to be paid off, a short-term policy can provide protection during that time. However, if you need protection for a longer period of time, traditionallife insurancePolicies may be a better option.
What is the cheapest life insurance?
The shortest life insurance period is one year. These policies can be renewed for up to 10 years at a higher rate each time you renew, or you can convert to another policyTypes of life insurance。
Why is short-term life insurance so cheap?
Short-term life insurance is cheaper than long-term insurance because it has fewer features. short-term policycash value life insurancepolicy, so they do not accumulate monetary value. They may not have passenger options and coverage may be lower than a regular life policy. A short-term policy also costs less because it covers a shorter period of time.