Comparing Short-Term vs. Long-Term Health Insurance: Which Is Right for You?

Ensuring our health is safeguarded against illnesses and unforeseen mishappenings is crucial nowadays. That is why insurance is essential as it stands as a shield, protecting us from the financial burdens of unexpected medical expenses. 

In the industry of health insurance, two prominent options often take the forefront: short-term and long-term health insurance. But which one is the right fit for you? Understand the details of each and compare health insurance to make an informed decision.

Understanding Short-Term Health Insurance

As depicted by the name, short-term health insurance is considered a temporary solution to your medical needs, covering the financial needs for your health for 12 months. In short-term policies, there are frequent renewals which are necessary because of their short duration.

These plans usually come with lower premiums as they have a smaller time frame and may not include coverage for maternity, critical illnesses, or pre-existing conditions.

Let’s look at the key features which come with short-term health insurance:

  • Limited Duration:  There is a limit to the duration of short-term health insurance, usually up to 12 months.
  • Frequent Renewal:  Compared to long-term plans, with short-term health insurance you need to have frequent renewals.
  • Restricted Coverage:  In short-term plans, there are restrictions, such as maternity or any pre-existing health conditions, due to their short-term nature.
  • Lower Premiums:  As short-term health insurance is temporary with a less duration, it comes with lower premiums.
  • Customisation: Policyholders have a choice of customising their plans and have plan frames, as per their specific needs.
  • Tax Benefits: Under Section 80D of the Income Tax Act, 1961, there are several tax benefits which one can avail when planning with a short-term insurance plan.
  • No Claim Bonus: There is a “No Claim Bonus” for policyholders, which they can use at the time of renewal and to get incentives and benefits in their premium or renewal payment.
  • Limited Discounts:   Due to the short-term duration and lower time frame, there are limited discounts with this health insurance plan.
  • Potential Renewal Rejection: If a serious illness is contracted during the policy term, there is a high chance that the issuer may reject your renewal application, due to its time frame.

Understanding Long-Term Health Insurance

Long-term health insurance is done for a prolonged duration, usually 2 to 3 years, which comes with various coverage. It covers a variety of medical expenses over an extended period, giving financial protection to the policyholders with peace of mind. 

Here are some key features of the Long-term health insurance plan:

  • Policy Tenor

Long-term health insurance plans typically have a duration of 2 to 3 years, which gives protection and coverage of health insurance for an extended period without the need for annual renewal.

  • Payment Structure

These plans often require a one-time payment which covers the entire policy duration.

  • Renewability

Unlike short health insurance plans that require annual renewal, long-term does not require constant renewals, saving time and energy for policyholders, at their convenience.

  • Coverage for Pre-Existing Diseases

Long-term health insurance plans may cover pre-existing diseases (PED) as well.

  • Protection From Premium Fluctuations

Policyholders are protected from fluctuations in rates over the policy duration, which ensures stable and predictable payments.

Difference Between Short Term Health Insurance and Long Term Health Insurance

Below are the key differences between short-term and long-term health insurance, making it easier for individuals to compare and choose the option that best suits their needs.

ParametersShort Term Health InsuranceLong Term Health Insurance
Policy duration12 months or lowerMore than 1 year
Total Premium costsLowerHigher
Coverage for pre-existing diseasesNo coverageCoverage after the waiting period has passed

Making the Right Choice for You

The choice between long-term and short-term health insurance should be based on your financial and health situations. Let us look at some major factors that should be considered before choosing the best health insurance for you.

Your Health Status:  Consider your health condition. If you are a healthy person and don’t require health-related help often, you can go with the short-term plan, as it might be a sufficient and better option. However, if you are somebody with pre-existing conditions or anticipate ongoing healthcare needs, there you will benefit from long-term health insurance coverage.

Budget Constraints: Short-term plans are sometimes appealing to people who want affordable coverage, especially if you’re between jobs or facing financial constraints. Meanwhile, people who can afford higher premiums and prioritise comprehensive coverage may choose a long-term plan.

Coverage Needs: Evaluate your healthcare needs, which should include medications, anticipated medical procedures, along with existing health conditions. Go with a plan that aligns with your coverage requirements assuring you protection.


Both short-term and long-term health insurance serve distinct purposes in healthcare coverage. With a proper understanding of the differences and assessing your individual needs, you can make an informed decision ensuring your well-being, both financially and health-wise in the long run.

However, if you’re in search of beneficial health insurance plans, renowned institutes like Bajaj Allianz offer both short and long-term health insurance plans. So, make your pick and secure your health right away.