Short-term life insurance is ideal for covering short-term needs, like a hazardous job contract. It’s also a good way to bridge any gaps in your coverage. But if you have financial dependents or obligations lasting several years, it may not be enough.
What is short-term life insurance?
A short-term life insurance policy pays out a lump sum benefit if you die during the specified term. Unlike a traditional term life insurance policy — which generally lasts five, 10 or 15 years — a short-term policy is only active for a short amount of time.
Depending on your insurer, you could get a policy that covers you anywhere from a few months to five years.
When is a short-term policy a good idea?
A short-term policy can be purchased by itself as a sole source of coverage, or it can be used to supplement an existing policy if you need to boost your coverage for a short period of time.
Short-term coverage might make sense in these situations:
- You’re traveling. If you’re going to be abroad and you want to make sure your family is financially safe while you’re traveling, a short-term policy can offer peace of mind.
- You’ll be in a dangerous situation. This can include physical danger, like extreme sports, or medical danger, like living in an area with a disease outbreak.
- You’re paying off a short-term debt. A short-term policy can make sure that your debts are paid off if something happens to you.
- You recently lost your job. If you had a group life insurance policy through work and lost your job, a short-term policy can be stopgap measure while you search for a new job that might let you sign up for a group policy.
- You need to wait to get a longer policy. Short-term policies can be more affordable than long-term policies, making them a common option for people who can’t afford a longer policy right now.
How much does short-term life insurance cost?
Rates can vary significantly depending on on your insurer and personal history. Your premiums will be based on your:
- Age. Younger policyholders will generally pay lower premiums.
- Gender. Men generally pay more than women due to a shorter expected lifespan.
- Occupation. The types of risks that you are exposed to while you are at work will also affect the premiums you pay. If you work in a high-risk occupation, such as mining or firefighting, expect to pay higher premiums.
- Health. If you have a pre-existing medical condition, your premiums will be higher than those who are in good health.
- Lifestyle. Smoking, excessive drinking and an unhealthy weight can all lead to higher premiums.
- Hobbies and pastimes. The activities that you do outside of work can increase your premiums, especially if they’re considered to be risky, such as skydiving, parasailing and scuba diving.
How do I buy short-term life insurance?
A handful of insurers offer short-term life insurance, including AIG, Legal & General and Prudential. It’s often marketed as annual renewable term (ART) life insurance, which is a one-year policy that your insurer guarantees to renew for a set number of years known as the “insurability period.”
The process of buying short-term life insurance is the same as any other policy type:
- Compare policies and riders from a range of life insurance companies.
- Get quotes from your top picks.
- Choose the best policy.
- Apply for coverage. This may involve filling out a health questionnaire or taking a medical exam.
- Pay your premiums on time to ensure your policy doesn’t lapse.
- When the end of your term is approaching, decide if you want to renew your coverage.
A short-term life insurance policy can be a useful way to get temporary coverage or increase your coverage while you’re facing an additional risk. But for long-term peace of mind, compare life insurance policies with longer term lengths to find one that fits your needs.
More guides on Finder
Life insurance stats 2024
A peek into Americans’ attitudes about life insurance.
Compare burial insurance for funeral costs
Cover funeral, burial and medical costs and help your loved ones financially when you die — but at a high price.
Is group life insurance worth it?
Learn about the life insurance you might be offered through work — and which exclusions to watch out for.
Best life insurance companies
These 10 life insurance companies beat their competition when it comes to their policy options, riders and reputations.
Compare 15-year term life insurance policies
Consider this policy if you have 15 years’ of financial obligations left.
How to get life insurance with a chronic illness
Buying life insurance with a pre-existing, chronic or terminal health condition is possible — but your options may be limited.
How to get life insurance if you’re considered high risk
Your options when your medical history, lifestyle or hobbies make getting coverage difficult.
Are life insurance premiums tax-deductible?
The tax implications of life insurance as an individual, self-employed person, owner of an LLC and more.
24 most unfortunate ways to die
Find out your odds of dying in more than 20 circumstances — and prepare to be surprised.
How to cancel or change your power of attorney
In most cases, you can change the person who’s empowered to make decisions on your behalf.
Ask an Expert