Difference Between Short-Term and Long-Term Health Insurance

When buying a health insurance plan, customers have a dilemma about whether to go for a long-term or short-term insurance plan. However, the choice of plan depends upon the individual’s situation, requirements, and goals in picking a suitable insurance plan, so it is recommended that you understand your insurance needs first. As healthcare costs are soaring, it is best to have the right insurance backup to avoid using up your savings during medical emergencies.

Long-term and Short-term health Insurance policies are two types of health insurance coverage. They both differ in their tenure, premium, and renewal. Both are suitable in different scenarios. While both aim to provide financial protection during medical emergencies, they differ significantly in their duration, coverage, benefits, and suitability for various life situations. Understanding these distinctions is crucial to making an informed decision that aligns with your individual needs and long-term financial goals.

Long Term vs Short Term Health Insurance: Comparison Table

What is Short-Term Health Insurance?

A short-term health insurance in India is a kind of medical insurance policy that offers coverage for a limited period. Generally, they have a validity period of 6 months to 12 months. Good short-term health insurance plans offer non-permanent coverage for any medical emergencies or requirements such as pre- and post-hospitalisation, ambulance charges, organ donor expenses and more. And foremost, they can be more affordable as compared to long-term since the premiums are on the lower side. Let’s take a look at the features and benefits of short-term health insurance plans and who should buy them.

Benefits of Short-Term Medical Plans

What is Covered In Short-term Health Insurance?

Typically, short-term health insurance covers:

• In-patient Hospitalization Expenses: This is the core coverage. It includes costs incurred when you are admitted to a hospital for at least 24 hours. This usually covers:
  • Room rent (often with a sub-limit)
  • Nursing fees
  • Doctor’s consultation fees during hospitalization
  • Operation theatre (OT) charges
  • Anesthesia charges
  • Costs of medicines and consumables
  • Surgical procedures
• Emergency Care: This includes medical treatment required in an emergency situation, such as accidents or sudden illnesses. Ambulance charges are also usually covered.
• Pre and Post-Hospitalization Expenses: Some plans may cover expenses incurred for a limited period before and after hospitalization (e.g., 30 days pre-hospitalization and 60 days post-hospitalization for major planned treatments). However, these periods might be shorter or have specific caps compared to long-term plans.
• Daycare Procedures: These are medical procedures or surgeries that require less than 24 hours of hospitalization due to technological advancements (e.g., cataract surgery, dialysis). Coverage for these is often included, possibly with specified sub-limits.
• Organ Donation Expenses: Some short-term plans might cover expenses related to organ donation where the insured is the recipient.
• Preventive Health Check-ups: A few plans might offer coverage for basic preventive health check-ups.
• AYUSH Treatments: A limited number of short-term plans might offer coverage for alternative treatments like Ayurveda, Yoga & Naturopathy, Unani, Siddha, and Homoeopathy (AYUSH), but this is less common and usually with specific conditions.

Who Should Buy a Short-Term Health Policy?

Short-term medical insurance plans are the best option for people who are unsure about buying a long-term policy. Short-term insurance will be highly useful for the following category of people:

• International students studying or travelling in foreign countries as it secures Non-Resident Indians (NRIs) from visiting the country for a brief duration.
• For people who switch jobs and require short-term health coverage while switching jobs or insurance providers, short-term plans are a suitable option.
• As most countries have mandatory insurance requirements for visitors so anyone travelling abroad for business or vacations needs short-term insurance.

Disadvantages of Short-Term Medical Insurance

• Short-term plans do not provide coverage for pre-existing conditions.
• You cannot benefit from the NCB in short-term plans.
• Short-term plans generally have less coverage for diseases and medical expenses compared to long-term plans.
• They need frequent renewal, which may need a little more attention than long-term plans.

What is Long-Term Medical Insurance?

Long-term health insurance is a health insurance plan with a tenure of around 2 to 3 years or more, depending on the insurer. Because of its permanent nature, policyholders can even get coverage for pre-existing diseases (PED). However, for the plan to cover pre-existing diseases, one would have to complete the waiting period specified under the plan. You can also get additional coverage for daycare treatments, comprehensive insurance plans where everything lies under an umbrella, which isn’t possible with short-term plans.

Benefits of Long-Term Health Plans

What is Covered in Long-term Health Insurance?

• In-patient Hospitalization Expenses: This is fundamental and covers all costs associated with being admitted to a hospital for 24 hours or more. This includes:
  • Room rent (often with higher limits or no cap)
  • Nursing care
  • Doctor’s fees and specialist consultations
  • Surgical expenses (surgeon’s fees, OT charges, anesthesia)
  • Medicines, drugs, and consumables
  • Diagnostic tests during hospitalization
  • ICU charges
• Pre and Post-Hospitalization Expenses: These plans typically cover medical expenses incurred for a specified period before hospitalization (e.g., 30, 60, or 90 days) and after discharge (e.g., 60, 90, or 180 days). This includes doctor consultations, diagnostic tests, and follow-up medications related to the hospitalization.
• Daycare Procedures: Coverage for a wide range of daycare procedures that don’t require 24-hour hospitalization due to advanced medical technology.
• Ambulance Charges: Costs for emergency ambulance transportation to the hospital.
• Maternity Benefits: Many long-term plans offer maternity coverage after a specified waiting period (usually 2-4 years), covering delivery expenses (normal and C-section), pre-natal, and post-natal expenses.
• Coverage for Pre-existing Diseases (PEDs): After a defined waiting period (commonly 2-4 years), long-term plans will cover medical expenses arising from pre-existing conditions. This is a crucial feature for individuals with chronic illnesses.
• Critical Illness Cover: Often available as an in-built benefit or as an add-on rider, providing a lump sum payment upon diagnosis of specified critical illnesses (e.g., cancer, heart attack, stroke).
• AYUSH Treatments: Coverage for treatments under Ayurveda, Yoga & Naturopathy, Unani, Siddha, and Homoeopathy.
• Organ Donor Expenses: Covers the medical and surgical expenses of the organ donor when the insured is the recipient.
• Domiciliary Hospitalization: Coverage for medical treatment taken at home if hospitalization is not feasible or advisable, as certified by a doctor.
• Health Check-ups: Many long-term plans offer annual health check-ups, often starting after a claim-free year.
• No Claim Bonus (NCB): A significant benefit where the sum insured increases (or premium decreases) for every claim-free year, providing an incentive for maintaining good health and continuity.
• Optional Covers/Riders: You can often customize your long-term plan with various add-ons like:
  • Personal Accident Cover
  • Daily Hospital Cash Allowance
  • Room Rent Waiver
  • New-Age Treatments (e.g., robotic surgery, deep brain stimulation)
  • OPD Cover (though less common for comprehensive coverage)
• Restoration/Reinstatement Benefit: If you exhaust your sum insured during a policy year, this benefit restores the sum insured for subsequent claims in the same year.
• Mental Healthcare: With recent regulations, many long-term policies now include coverage for mental health conditions.

Disadvantages of Long-Term Health Insurance Plans

• It could be difficult to make changes to long-term plans once they are bought.
• People may not be inclined towards long-term plans, in case health insurance premiums need to be paid in a lump sum, so the cost of a long-term plan will be much higher.
• In the market, there are very few senior and super-senior citizens with affordable long-term plans.

Who Should Buy a Long-Term Health Policy?

With many advantages, long-term policies are best suited for people who have stable jobs and are looking for comprehensive health coverage for themselves as well as for their families. A long-term health policy protects the policyholders against any unexpected illnesses or accidents. The following are the categories of people who should look into getting a long-term policy: