A Detailed Comparison Of Short Term And Long Term Term Insurance

Short Term And Long Term Term Insurance

Life insurance trends have changed over the years just as lifestyles have changed. Today, you can even buy life coverage such as a term insurance policy online. You also have the option of choosing a short-term term insurance plan instead of the regular long-term term plan. But what are the differences between short-term and long-term term insurance? Read on to compare insurance policy that is short-term vs long-term:

Duration of policy: 

A short-term insurance policy has a tenure of at least five years.  In contrast, long-term life insurance has a tenure of an average of 35–40 years.

Coverage for the insured individual:

The entry age of the insured individual in both cases is a minimum of 18 years. The maturity age is usually 75–80 years. Nowadays, some insurers offer coverage for people over the age of 100 years also!

Premiums can be changed:

A term life insurance policy that is bought for the long term has a locked-in premium. This means that the premiums do not change over the course of the coverage period. In contrast, with short-term life insurance policies, the premiums can be increased or decreased as per factors such as income, mortality, and so on.


Whether you take long-term term insurance or short-term term insurance, both allow you to renew your life insurance. The minimum renewal tenure is usually five years. When you renew life insurance you can enjoy the benefits of life coverage without an increase in premiums.

Death benefit:

When you compare insurance policy that is short-term vs long-term, this is where you will find another common ground. When the insured person passes away, their beneficiaries will receive the Death benefit. The insurance company may pay the benefit as a lump sum, or partial sum amount, on a yearly or monthly basis, and so on.

Survival benefits:

A short-term insurance policy will not have any survival benefits. In contrast, today, even term insurance policies may offer a maturity value or premium return where if the policyholder survives the coverage period, the insurer will pay them the amount equal to their premiums paid.

Additional benefits and coverage:

Both short and long-term term insurance policies have the same tax-saving benefits. Moreover, both can offer additional benefits to insurance riders such as the Accidental Death or Disability Benefit rider.

Who should take it:

  • If you compare insurance policy features of long and short-term term insurance, you will find that both offer similar benefits. However, short-term term insurance is more suitable for individuals who travel extensively, or work in dangerous occupations perhaps only for a limited time while having financial liabilities. Long-term term insurance, on the other hand, can be availed by anyone who wants to provide financial coverage for their loved ones upon their passing.

When choosing your term insurance policy, assess your individual needs and financial situation. While long-term term insurance is usually preferable, it may not be the best option for you. So, compare all the policy features and then choose the term insurance type that fits your requirements.


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