Long-Term vs Short-Term Health Insurance – Guide to Choose the Best

Owing to rising medical costs, if you or a family member need hospitalisation or medical treatment, you may have to spend a significant amount of your savings.

One way to overcome these financial traps and protect yourself and your family is to buy a Comprehensive Health Insurance Policy. A Health Insurance policy will pay for any medical expenses incurred due to hospitalisation, surgeries, treatments, ambulances, etc. This is done either through cashless hospitalisation or reimbursement. 

Long-Term vs Short-Term Health Insurance

If you have long-term Health Insurance, such as a Star Comprehensive Insurance Policy or a Critical Illness Multi pay Insurance Policy, the benefits are long-term.

However, in addition to long-term plans, insurers have also introduced short-term Health Insurance policies. 

Therefore, it is essential to understand the distinction between the two before you buy Health Insurance online.

To help you in choosing an appropriate health plan, the following table compares long-term and short-term Health Insurance in India.

Features	Short-Term Health Insurance	Long-Term Health Insurance
Policy Period	Less than 1 year (3 months, 6 months, 9 months)	More than 1 year
Premium	Low Premiums	High Premiums
Renewability	After the policy expires (3 months, 6 months)	After the policy expires (1 year, 2 years, 3 years)
Pre-existing Diseases Cover	Only a handful of policies cover PEDs, such as policies for Covid-19 as per policy terms and conditions	Most policies cover PEDs as per policy terms and conditions
Add-on Covers	Unavailable	Available
Suitable for	People who want temporary coverage, such as NRIs or international students, or coverage for particular conditions like COVID-19	People who want comprehensive protection or long-term protection.

Advantages and disadvantages of short-term Health Insurance

In addition to covering many Health Insurance costs, a short-term Health Insurance plan has several advantages and disadvantages.

Advantages 

• These plans are suitable for a shorter period as they provide coverage at a more reasonable cost.
• Short-term Health Insurance plans can also include perks like cumulative bonuses.
• This is a good option for people who have only employer-sponsored Health Insurance policies or residing temporarily in the country.
• With short-term Health Insurance, you can take advantage of tax benefits provided by Section 80D of the Income Tax Act of 1961.

Disadvantages 

• You must renew these plans frequently to maintain the benefits, such as a cumulative bonus.
• Over time, a short-term plan’s premium may cost more than regular annual or long-term Health Insurance.
• Usually, these plans do not cover pre-existing diseases.
• You will not be able to avail add on covers, such as maternity benefits.

What is covered in short-term Health Insurance plans?

• Hospitalisation
• Ambulance charges
• Organ donation expenses
• Health check-ups
• Pre- and post-hospitalisation

Advantages and disadvantages of long-term Health Insurance

Long-term Health Insurance policies offer more comprehensive coverage for medical emergencies.

Advantages:

• You can benefit from the Health Insurance policy’s protection for a more extended period.
• You do not need to renew your Health Insurance frequently or worry about forgetting to do so and letting your coverage lapse.
• When you choose a long-term Health Insurance plan, many insurers will provide a discounted price.

Disadvantages:

• It may be challenging for some people to pay a higher premium 
• The procedure of porting a policy to a new insurer will take longer and could be more challenging because the policy period is longer.

What is covered in long-term Health Insurance plans?

• Pre- and Post-hospitalisation
• Daycare procedures
• Modern treatments
• AYUSH treatments
• Add-on covers
• Wellness programs
• Critical Illness Cover
• Pre-existing diseases (PEDs)

Conclusion

Now you know the difference between short-term and long-term Health Insurance, along with its advantages and disadvantages, you can make an informed decision about the best Health Insurance Policy. Please note that currently, we do not have any short-term policies.

Now, it is up to you to decide if you need a short-term or long-term plan. The most crucial lesson to learn is that everyone needs Health Insurance. So, if you do not already have one, invest in one right away!