What is a Short Term Policy and How is it Beneficial?

Term Insurance

Investing in an insurance policy is essential as life is unpredictable. You never know what life is going to show you. So, to protect your loved ones from future consequences, investing in a life insurance policy is a must. You have the option of investing in a short-term insurance policy if you are not interested in the long-term. Let’s get a clear understanding of short-term insurance policy and its benefits.

What is a Short Term Policy?

A short-term policy is a life insurance policy that offers coverage for a short duration of time. This type of policy remains active for a defined short period and has a specific purpose. In a short-term life insurance policy, the nominee gets the assured sum only if any unfortunate event happens during the policy period. It is a temporary coverage plan that has several benefits that you should surely check out before making any decision.

Benefits of Short Term Policy

Provide Financial Security

Term insurance for housewives offers financial security to households of those females. This plan will ensure that your family won’t suffer financially in difficult times. It can help you in fulfilling your short-term as well as long-term financial needs. It provides financial security to your loved ones.

Death Benefit

Short term life insurance policy offers financial benefits to the insured person’s family. In this policy, the nominee receives a sum at the unfortunate demise of the insured person during the policy term.

Income Tax Benefit

Under section 80C of the Income Tax Act, you can reduce your tax burden by investing in short term policy. However, tax laws are subject to change from time to time.

Surrender Benefit

If an insured person surrenders before the maturity period, he/she gets the surrender benefit in case of a short term life insurance policy.

Additional Riders

Policyholders of short term policy have the advantage of extra cover in case they add additional riders to the policy. Please note that riders are not mandatory and are available at an additional cost.

Low premiums

Short term policy offers the benefit of low premiums to policyholders. Such policies require low premiums compared to other life insurance policies. The premium amount also depends on the assured sum. Nut usually, the short-term policies have short policy tenure, therefore the premium is also low for these policies.

Working of Short-Term Insurance Policy

The working of short-term insurance policy is pretty simple. During the policy tenure, the person who takes the investment plan pays premiums. In return, the person is provided financial protection for that particular duration.
In case of the unfortunate demise of the insured person, the nominee receives benefits depending on the premium. The policy does not offer any monetary benefits at maturity.The nominee won’t get any sum if the insured person passes away after the policy expiration.

If you can only pay small premiums, you should surely invest in a short-term insurance policy. Since you can never predict any unforeseen circumstances, it's better to have an insurance plan for the short term. Even short-term policies offer various benefits such as income tax benefits, death benefits, low premiums, add-on covers, etc. Protect your family for a short duration and invest in some long-term insurance policies once you have the budget.

Disclaimer:

*Tax benefits are as per the Income Tax Act, 1961, and are subject to any amendments made thereto from time to time
The article is meant to be general and informative in nature and should not be construed as solicitation material. Please read the related product brochures for exclusions, terms and conditions, warranties, etc. carefully before concluding a sale.
Make responsible financial decisions. Consult with your financial advisor before making any decisions on insurance purchase.

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