Short-Term Life Insurance

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  • Short-term life insurance provides temporary protection if you need to wait on buying a long-term plan or are waiting for a permanent policy to go into effect.

Life insurance is designed to give your loved ones peace of mind and financial stability in the event of your death. Your death benefit can cover funeral expenses, burial costs and even financial obligations such as mortgage, monthly bills, education and other expenses your family needs to pay. Life insurance policies typically have a waiting period from the time you file your application to when your plan is approved and put into effect and you pay your first premium. That process — known as underwriting — can take four to six weeks, or longer. 

If you don’t have a current policy in place, you will not have coverage until your new application is processed and approved. You can buy short-term life insurance to provide you with temporary coverage to fill in the gap. There are two types of short-term life insurance plans, known as temporary insurance agreement (TIA). Short-term policies offer protection if you need to delay buying a long-term policy while an annual renewable life insurance is designed to last one year, with premiums increasing each year the policy is renewed. 

When Does Short-Term Life Insurance End?

Short-term life insurance benefits are typically equal to the amount of coverage you purchase for a permanent term or whole life insurance policy. The death benefit has a limit — usually $1 million. Short-term life insurance generally ends when one of the follow occurs:

  • Your long-term permanent policy goes into effect
  • A period of time has passed — usually 60 to 90 days — after your application is filed
  • You cancel your proposed long-term application or request a refund on the policy
  • You are denied traditional life insurance coverage

Short-Term Life Insurance Provides Temporary Coverage

Sometimes, applicants seek short-term life insurance while waiting for their insurer to approve their permanent policy in the interim, or they were denied coverage. If you are denied coverage or think you will be because of high-risk factors, you can buy short-term coverage to use temporarily while you improve eligibility criteria. 

Annual Renewable Life Insurance

Annual renewable life insurance is a one-year policy that renews annually, similar to term life insurance. However, the premiums start lower than traditional insurance and increase every year the policy is renewed. Renewable life insurance is ideal for applicants who anticipate major life changes that could determine eligibility and premium rates for permanent life insurance, such as:

  • You’ve been convicted of a felony and waiting for your probationary time to end
  • You are pregnant and or recently had a child
  • You are overweight and trying to lose weight for health reasons
  • You recently quit smoking and or you’re a former smoker

The Cost of Annual Renewable Life Insurance

Unlike renewable life insurance, short-term policies are not available as a standalone plan because temporary policies are tied to the permanent life insurance you purchase from your insurance company. Annual renewable life insurance premiums increase annually, which means at some point, you might be paying more for a renewable policy than you would for permanent term or whole insurance. A non-smoking, 30-something male applicant can get a renewable life insurance policy for $140 a year compared to a term life insurance plan for $170 a year. However, within four years, the same annual renewable policy will be more expensive than the $170-a-year term life policy.