Short Term Life Insurance Plans
Do you think life insurance is a long-term commitment? Then you must not have heard about short-term insurance plans. As the name suggests, these plans provide life coverage for a very short period, typically ranging from 5 to 10 years.
Since the tenure is short, the premiums are lower, and the premium payment term is also short.
Let us learn about these plans in detail.
What is Short Term Life Insurance?
To put it simply, short-term life insurance plans offer life cover for a short duration. Like a term insurance plan, it provides death benefits to the nominee if the policyholder passes away during the policy tenure.
Unlike life insurance, short-term life insurance does not include any savings component or wealth growth features. Whether you are on a short stay in India for professional work or an individual with limited financial capacity seeking life security, short-term life insurance is a suitable option.
Short Term Life Insurance Plans for All Age Groups
We have compiled a list of the top 5 short-term insurance plans in India for a 25-year-old non-smoker earning ₹5 lakhs or above annually, seeking ₹50 lakhs in coverage for 5 years.
| Short-term Insurance Plan | Entry Age | Life Cover | Policy Term | Monthly or Annual Premiums |
|---|---|---|---|---|
| Edelweiss Tokio Saral Jeevan Bima | 18 - 65 years | ₹50 Lakhs | 5 years | ₹465/month ₹5,277/year |
| Bandhan Life i-term Prime | 18 - 65 years | ₹50 Lakhs | 5 years | ₹483/month ₹5,550/year |
| ICICI Prudential Saral Jeevan Bima | 18 - 65 years | ₹50 Lakhs | 5 years | ₹701/month ₹8,205/year |
| HDFC Life Saral Jeevan Bima | 18 - 65 years | ₹50 Lakhs | 5 years | ₹1,101/month ₹12,579/year |
| PNB MetLife Saral Jeevan Bima | 18 - 65 years | ₹50 Lakhs | 5 years | ₹1,275/month ₹14,396/year |
Key Features of Short-Term Insurance Plans
A short-term insurance plan can secure your family, especially if you do not wish to commit to a long-term plan. For instance, you might need coverage for a few years to ensure that if an unfortunate event occurs, your family can use the death benefit to pay off an ongoing loan.
Here are a few other benefits associated with buying short-term insurance:
Guaranteed Protection
Despite its short tenure, the policy guarantees to pay the promised death benefit to the nominee. This amount can be used to pay off debts, maintain living standards, and fulfill the objective for which the policy was purchased.
Optional Riders
For a nominal additional premium, you can also add optional riders to your short-term insurance plan. Please note that riders can only be added at the time of purchasing the short-term insurance policy.
Tax Benefits
A short-term life insurance policy allows you to maximize your tax savings under various sections of the Income Tax Act.
- Under Section 10(10D) of the Income Tax Act, 1961, the death benefit or maturity benefit is tax-free. This means your nominee receives the entire amount without any tax deductions.
- Under Section 80C of the Income Tax Act, 1961, you can claim tax deductions of up to ₹1.5 lakhs annually for premiums paid towards the policy.
Affordable Premiums
Unlike other life insurance products, a short-term insurance policy offers life cover for relatively lower premiums. This is due to its short policy duration, making the premiums affordable.
Who Should Buy Short-Term Insurance Plans?
Life is unpredictable, and there are many instances where temporary insurance coverage may be needed. A short-term insurance plan is ideal for the following individuals:
- Professional workers who are switching jobs.
- Individuals on a short stay in India.
- Those with limited financial capacity seeking life security.
- Anyone needing quick coverage for a few years.
- Youngsters in their 20s starting careers and looking for affordable short-term life cover.
Documents Required to Purchase Short-Term Insurance Plans
When purchasing short-term life insurance, policy buyers must submit a set of documents to their insurer.
Here is a list of mandatory documents required to buy a short-term life insurance policy, irrespective of age and gender:
- Identity Proof
- Address Proof
- Income Proof
- Medical Reports
- For Employees: Last 3 months' salary slips and bank statements showing salary credits.
- For Self-employed: ITR of the last 3 years with Computation of Income (COI).
- Two passport-size photographs
- Policy invoice number and coverage details of pre-existing insurance policies (if any).
Conclusion
Since no one can predict the future, securing an insurance plan, even for the short term, is advisable. The primary difference between short-term and term insurance plans is that short-term plans provide temporary coverage for a limited duration. They also typically come with relatively lower premiums compared to other life insurance products.
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