Long Term vs Short Term health Insurance – Which One to Pick?

Shopping surely brings joy but only if the purchases have been done right. The wrong-bought products can very easily become a headache instead of being a solace. Shopping for health insurance is no different. If bought right, it can be the best investment you ever make. But the overwhelming choices can make buying the right health insurance plan with the ideal benefits, services and tenure. This is why it is important to understand the basic differences between long term health insurance and short term health insurance. Only then you can decide which one is good for you as an individual, at a given point in time.

Long Term vs Short Term Health Insurance – A Quick Look

Parameters	Short Term Health Insurance	Long-Term Health Insurance
Tenure	3 months to 12 months	2 years to 5 years
Customisation	No	Yes – using add-ons
Cost	Low Premium Amount	Higher as compared to Short Term plans
Renewal Period	Upon maturity (3 to 12 months)	Upon maturity (2 to 5 years)
Pre-Existing Diseases Cover	No	Yes – may include a waiting period

Short Term Health Insurance

Short term health insurance plans are just like any other health insurance plan available in the market. The only notable thing here is that they are available for quite a short tenure, typically 12 months or less. You get all the benefits of a normal health insurance plan but the coverage expires in the maximum of 12 or less, as per the plan terms. The tenure can vary depending on the type of plan or the provider and can even be as low as 3 months. Another thing to note here is that despite the shorter tenure, the coverage that short term insurance plans offer is very comprehensive and can be as high as most long-term plans.

Basic Features of Short Term Health Insurance

Listed following are some of the main features of the Short Term health insurance plans:

• Tenure: The tenure of a Short Term health insurance plan can be anything from 3 months to 12 months. The actual tenure options can be decided as per the terms of the insurance providers.
• Inclusions: The basic services like hospitalisation costs, emergency medical treatments, lab tests, pre and post hospitalisation services, and diagnostic tests are covered by most Short Term health insurance plans.
• Add-ons: Most Short Term health insurance plans do not come with the customisation option with add-ons. However, a few insurance providers may offer this option.
• Exclusions: Long-term services and benefits like maternity cover, pre-existing diseases cover, and critical illnesses cover are not included in most Short Term plans. Apart from that, all general exclusions for health insurance plans apply as well. For example, cosmetic surgeries, obesity treatment, etc.
• Renewability: All Short Term health insurance plans are renewable. You can simply apply to renew the plan the same way as any other health insurance plan.

Pros of Short Term Health Insurance

• Very Cost-Effective: Since Short Term plans are effective for a shorter tenure and offer all the basic benefits, they come with rather low premium amounts. You will get the coverage that you want but with relatively lesser money spent. This is because the insurance company has to take responsibility for your medical expenses for a lesser period.
• Easy Transfer Between Insurance Companies: Typically, you can only switch your insurance plan or provider at the time of renewing the plan. Since Short Term health insurance plans only last for a few months, switching is a lot easier if you do not like your current insurance provider.
• Transferable NCB: The no claim bonus is one of the most desired benefits of any health insurance plan. The same benefits are extended to Short Term health insurance plans. The no-claim bonus is generally transferable even for a Short Term insurance plan which means you can easily switch providers.
• More Flexibility: The shorter term offers a better level of flexibility as you do not have to make do with the very first plan that you choose. You can quickly change your plans as they mature early and find ones that are better with a hit and trial option if you prefer it that way.
• Easy Protection for Short Term Needs: If you require health insurance for a shorter period but not want to be held with a plan for years, Short Term health insurance plans are the best choice for you.

Cons of Short Term Health Insurance

• The renewal rate is a lot higher with Short Term health insurance plans because they expire quickly.
• If continued for several years by renewing upon each maturity date, Short Term health insurance plans can cost more than long-term health insurance plans. The total premium will add up to be a lot more than what you could have paid with a basic long-term plan.
• Since there are no add-ons available for most Short Term health insurance plans, you will not be able to customise them a lot.

Long Term Health Insurance

The typical health insurance plans that are mostly bought by policyholders, long-term health insurance plans come with a validity period of 2 to 3 years at least. Long-term health insurance policies come in several types and for a variety of groups of people. There are family health insurance plans, senior citizen plans, individual plans, and more in the long-term health insurance plans category. The longer tenure also makes room for more long-term benefits and makes these plans more comprehensive as compared to Short Term plans.

Basic Features of Long-Term Health Insurance

• Tenure: The tenure of a long-term health insurance plan can be tenured anywhere from 2 to 5 years. The policyholder can decide on the tenure as per the options available with their health insurance providers.
• Inclusions: Long-term health insurance plans are some of the most comprehensive plans available in the insurance market. They cover all basic benefits such as hospitalisation costs, pre and post hospitalisation services, lab tests, consultations, prescription medicines, etc. On top of it, you also get additional long-term benefits like pre-existing disease cover.
• Add-ons: All long-term health insurance plans can be customised using add-ons. Most add-ons are available to be taken with these plans such as dental care, optical cover, maternity cover, or critical illness cover.
• Exclusions: Long-term health insurance plans only have the generally specified exclusions with them such as cosmetic surgeries, non-essential medical treatments, etc. The services that are not available as add-ons can also be included as the exclusion for the plan in consideration.
• Renewability: All long-term health insurance plans can be renewed. The typical renewal period is never less than every two years though. So, once you have the plan, you are good for two years at least, or more.

Pros of Long-Term Health Insurance

• More Stable: The longer tenure of these health insurance plans offers much-needed stability to the plan holders. You will have to renew less and worry less about frequent changes in the premium amount as well.
• Less Frequent Renewals: The longer tenure of the long-term health insurance plans ensure that the policyholder does not have to worry about missed renewal dates very frequently. It introduces a sense of stability as well.
• Better Coverage: Long-term health insurance plans offer comparatively better coverage than Short Term health insurance plans. They come with more benefits and are even higher assured amounts.
• High Claim Settlement Ratio: The CSR or claim settlement ratio of long-term plans is very high. Since most benefits are already covered by the plan, the chances of a claim getting denied are very low.
• Cheaper in the Long Run: Long-term health insurance plans may seem expensive at the first glance but they turn out to be very cost-effective in the long run.

Cons of Long-Term Health Insurance

• The flexibility of changing plans and insurance providers less when it comes to long-term health insurance. You can only change either of these two things at the time of renewal which comes once every few years only.
• The comprehensiveness and complexity of the long-term health insurance plans make it a little harder to have them ported to another insurance company. This is because there is a well enough chance that the benefits may differ for each provider and it takes a lot of time to match the benefits and prepare a new quote.
• You may have to wait for several years to upgrade or customise the plan that you have right now. Customisation by addition or deletion of add-ons can also be done at the time of renewal only.

Which One Should I Pick?

The tenure that you pick depends on your current needs and expectations from your health insurance plan. Explained following are scenarios where each of these two plans can be chosen as ideal options:

Short Term Health Insurance Plans are ideal for:

• A non-resident of UAE or students in the country for a small visit. The tenure of the plan can be chosen as per the duration of your visit.
• Employees who are about to switch jobs. If the employee has no other health insurance than the company’s group health insurance, a Short Term plan may come in handy. It will cover you for the time being while you switch jobs and the next group health insurance takes over.
• If you are switching insurance providers but haven’t made a decision yet. It is never a bad decision to take your time and find the right plan. However, it may cause problems if your current coverage ends before you finalise on a new provider. A Short Term health insurance plan can cover this period and give you enough time to make a decision.

Long-Term Health Insurance Plans are ideal for:

• If you need comprehensive coverage. Long-term health insurance plans are the perfect fit for you if you need all-around comprehensive coverage.
• UAE residents who are in the country for the long haul. If you are staying in the UAE as a resident then getting a long-term insurance plan might be more beneficial. You have no time constraints, will get more, benefits, and save money in the long run.
• Senior citizens with pre-specified needs. Our health insurance needs may change quite a lot over time but they are pretty much decided once we reach old age. You will be aware of the things and support you need from your insurance plan by this point. This makes long-term plans a great choice to go with. Not to mention, these are the only plans that will provide cover for senior citizens too.
• People with critical illnesses. Critical illness cover is either available as an add-on option with long-term health insurance plans or as a completely separate health insurance plan. Both these options will require you to purchase a long-term plan if you need critical illnesses covered.

Conclusion

Due to their strength and qualities, choosing one of these two options can be a little confusing at first. All you need to do is align your needs ideally, make a proper list of the benefits you are looking for and then run a proper comparison exercise using an insurance aggregator like PolicyBazaar UAE. With the right research, information and a little bit of assistance from our experts, you can easily have your pick between the short term and long-term health insurance plans.