Policy Types

When Is Short-Term Life Insurance A Good Idea?

There are certain situations where a short-term life insurance policy may be exactly what you need. While it won't replace a traditional long-term policy, it sometimes can be used as an added layer of coverage.

 

Understand the Benefits of Short-Term Coverage

Have you ever wondered why there are so many different types of life insurance? In short, it's because people have different needs. This allows everyone to find the right policy to protect the people they care about with the death benefit that a life insurance policy provides.

And while most people have a need for long-term life insurance protection, others (and perhaps even you at some point) may need short-term life insurance coverage to help with a specific need. But what is short-term life insurance, and when is a short-term insurance policy a good idea? That answer depends on your individual situation, as well as how much life insurance you currently have in place.

What is short-term life insurance?

Simply put, short-term life insurance is typically a life insurance policy that provides coverage for less than a year. It's meant to cover you for a short period of time, and for a specific purpose. What it's not meant to do is to replace your existing life insurance coverage or to be a cheaper alternative to a more traditional life insurance policy if you have the need for long-term coverage.

Situations when a short-term life may be appropriate

So why would someone consider a short-term life insurance policy? The following are just a few reasons why a short-term life insurance policy may be a good choice as either a single, stand-alone temporary policy, or as an additional layer of coverage to your existing life insurance.

  • You're traveling and want to have an additional layer of coverage
  • You may be exposed to a dangerous situation or event
  • To provide coverage for a short-term loan or business transaction
  • When it's more important for you to have a greater amount of life insurance for the short-term vs. long-term needs (such as when you are carrying a mortgage or other substantial short-term debts)
  • A type of “bridge” coverage until a certain situation improves For example: you're a smoker paying high premiums and won't qualify for non-smoker rates until you are smoke-free for a certain amount of time.

Remember, while short-term life insurance has its merits, you may be better served by purchasing a 20 or 30 year term policy that you may be able to renew at the end of the term, or even a smaller permanent life policy with the potential to grow in cash-value over time and that won't expire as long as the policy is in force. If you're not sure if your situation is better suited to a short-term life insurance policy, consult with a qualified agent or company representative to determine the right product for your needs.

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All Learning Center articles are general summaries that can be used when considering your financial future at various life stages. The information presented is for educational purposes and is meant to supplement other information specific to your situation. It is not intended as investment advice and does not necessarily represent the opinion of Protective Life or its subsidiaries.

Learning Center articles may describe services and financial products not offered by Protective Life or its subsidiaries. Descriptions of financial products contained in Learning Center articles are not intended to represent those offered by Protective Life or its subsidiaries.

Neither Protective Life nor its representatives offer legal or tax advice. We encourage you to consult with your financial adviser and legal or tax adviser regarding your individual situations before making investment, social security, retirement planning, and tax‐related decisions. For information about Protective Life and its products and services, visit www.protective.com.

Companies and organizations linked from Learning Center articles have no affiliation with Protective Life or its subsidiaries.

Short Term Life Insurance

Wondering if short-term life insurance is for you? This article looks at what short-term life insurance is and situations in which it may be appropriate. Be sure to take into account things such a traveling abroad, partaking in dangerous activities or transitioning your life habits. Short-term life insurance could be a solution to those types of scenarios. For more information, visit the Protective Life Learning Center.

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