The Difference Between Short Term and Long Term Policies

In general, all term life insurance is considered 'short term' cover as you are not getting your coverage for life. This is when you compare term life cover with universal or whole life insurance which offers you protection for the duration of your life, rather than a specific term. However, within short term coverage policies you can also get cover for a short period of time, such as 5 years, or a long period of time, such as 30 years, so locate proper coverage amounts.

Term life insurance is usually offered in increments of five years up to 30 years. This means you can purchase a short term policy for 5 or 10 years or stick to a long term policy for 15, 20, 25 or 30 years. With short term policies you may be able to only purchase coverage for one year and then have the option to renew or cancel every year but this depends on the provider among many other things.

Short Term Vs Long Term Insurance

The main difference between short term and long term life insurance policies is how long you are covered for. Unlike whole life insurance you are not covered until the day you die, whether this is 10 years down the road or 40 years down the road. You are only covered for a certain period of time or term, as decided by you and as confirmed by your policy. Short term life insurance policies only offer protection and compensation if you do die during this period of time. Long term policies offer a longer period of time that you are protected for.

Another big difference between short and long term policies is your premium payment options. Short term policies may be a tad more expensive than long term policies that offer the same amount of protection. However, you will be paying your long term policy premium for a lot longer. When it comes to term life insurance there are different payment options but the most popular method of paying your premium is on an annual basis. With a long term policy that lasts 20 years you can expect to pay a premium for, you guessed it, 20 years. With a short term policy of 5 years you will pay a premium once for 5 years.

Selecting a Policy

Knowing how long to get your term life insurance for can be tricky and will depend on a number of things. One of the things you need to think about is what you are getting the coverage for in the first place. Term life insurance is offered purchased by those that have a large debt such as a mortgage or that have children. You may wish to include the policy until the mortgage is paid off or until your children have grown up and are self sufficient, more or less. Many people will look into term cover just until they retire and then will stop worrying about any form of protection.

Knowing the difference between short term and long term policies is one of the things you should consider when you are comparing term life insurance. Furthermore, think about your specific needs when looking into the various time frames for coverage. If your kids are 2 and 4, then you may want a coverage policy for 15 years. If your house will be paid off completely in 25 years, then you may look into a long term policy of 25 years as well. That way, if you do die in the time, your family will have the money to pay off the debt every month without losing their home.

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