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Life insurance policies can play a crucial role in financial planning by helping protect your loved ones in case you pass away. Some policies can also help you build wealth and add to your estate plan. However, coverage gaps can happen, leaving your beneficiaries vulnerable if you pass away during one of these gaps.
Fortunately, short-term life insurance policies can help cover you until you secure a longer-term traditional life insurance policy and then expire once you get that new policy. This article will explain how short-term life insurance works, when to consider this type of policy, and some long-term life insurance alternatives to consider.
A short-term life insurance policy is designed to provide coverage for a shorter period than traditional life insurance policies. Coverage typically lasts no longer than one year.1
Short-term policies work exactly like traditional policies, aside from the shorter term length. The policyholder pays premiums, and in exchange, the insurer pays their beneficiaries a death benefit if the policyholder passes away during the policy term.
Don’t wait until it’s too late. Help cover yourself and your family with affordable coverage from Aflac.
There are two main types of short-term life insurance:1
Temporary life insurance is designed to provide coverage for a year or less before expiring. Some long-term policies offer this insurance during the underwriting process so you can be covered while awaiting approval for your policy.
Annual renewable life insurance is a one-year policy that lets you renew coverage if needed each year. This offers flexibility if you don’t want to commit to a longer policy, but your premiums will increase yearly.
Here are the average short-term life insurance rates by age for healthy males:2
| Age | $250,000 death benefit | $500,000 death benefit | $1,000,000 death benefit |
|---|---|---|---|
| 25 | $17.26 | $27.13 | $43.73 |
| 35 | $18.88 | $30.79 | $51.05 |
| 45 | $35.84 | $61.49 | $112.47 |
| 55 | $84.59 | $153.76 | $281.13 |
Here are the average rates by age for short-term life insurance for healthy females:2
| Age | $250,000 death benefit | $500,000 death benefit | $1,000,000 death benefit |
|---|---|---|---|
| 25 | $14.39 | $21.01 | $32.53 |
| 35 | $16.71 | $25.76 | $42.01 |
| 45 | $28.90 | $48.43 | $86.32 |
| 55 | $61.86 | $111.35 | $206.69 |
Short-term life insurance’s temporary policy term makes it a good option for a few scenarios:
Short-term life insurance can be a great temporary solution. But if you want coverage for a longer period, here are some life insurance policies you could upgrade to:
Term life insurance covers you for a fixed length of 10 to 30 years, depending on the term length you choose. If the policy expires, you must renew it or get a new policy to continue coverage. However, premiums are low relative to the death benefit.3 Aflac offers term life insurance with various term lengths and death benefit sizes to fit your needs and budget.
Whole life insurance is a permanent life insurance policy, so it helps cover you for life and offers a cash value growth component. The insurer puts some of each premium payment into the cash value, which grows tax-deferred at fixed interest.
As you accumulate enough cash value, you can tap into it via borrowing or withdrawals. You receive your cash value minus surrender charges if you ever surrender your policy. In exchange for lifelong coverage and cash value, premiums are higher than term life insurance.3 That said, Aflac’s whole life insurance policies could offer significant peace of mind and wealth-building potential for the right person.
Final expense insurance is a small whole life policy designed for funeral costs, medical bills, and other end-of-life expenses. It offers low premiums, lifelong coverage, and cash value. Additionally, this type of policy doesn’t require a medical exam. However, the death benefit is smaller. These policies typically offer death benefits of up to $35,000, although some may offer a little more.4
The median cost of a funeral is nearly $8,000.5 A final expense insurance policy from Aflac can help your loved ones cover this expense and other costs when that time comes.
Universal life insurance offers lifelong coverage and cash value, like whole life insurance. However, you can change your premiums and death benefit within certain limits. Raising your death benefit involves an increase in premiums. On the other hand, decreasing your premiums reduces your death benefit. Universal life insurance also tends to cost less than whole life insurance.6
At some point, you may temporarily lose your life insurance coverage as your life changes. Short-term life insurance policies prevent these changes from putting your loved ones at risk. Whether you’re awaiting approval on a long-term life insurance policy, changing jobs, improving your lifestyle to get better rates, or seeking to help cover temporary debts, a short-term life insurance policy can hold you over at a low rate. However, these policies don’t let you lock in your rates for the long term. Eventually, you may want to get a traditional life insurance policy.
Aflac offers numerous long-term life insurance policies, including whole life insurance, final expense insurance, and term life insurance. Start chatting with an agent today to learn more about Aflac’s life insurance products and find the right option for you.
1 Bankrate – Short-Term Life Insurance. Updated March 15, 2023. https://www.bankrate.com/insurance/life-insurance/short-term/. Accessed May 16, 2023.
2 Policygenius – What is Short-Term Life Insurance? Updated May 1, 2023. https://www.policygenius.com/life-insurance/short-term-life-insurance/. Accessed May 16, 2023.
3 Forbes – Term vs. Whole Life Insurance: What’s the Difference? Updated November 1, 2022. https://www.forbes.com/advisor/life-insurance/comparing-term-life-vs-whole-life-insurance/. Accessed May 16, 2023.
4 Investopedia – Final Expense Insurance: What It Is, Who Needs It, Pros and Cons. Updated August 20, 2022. https://www.investopedia.com/final-expense-insurance-4801018. Accessed May 16, 2023.
5 Forbes – How Much Does a Funeral Cost? Updated October 1, 2022. https://www.forbes.com/advisor/life-insurance/how-much-does-a-funeral-cost/. Accessed May 16, 2023.
6 Forbes – Whole Life vs. Universal Life Insurance. Updated April 19, 2023. https://www.forbes.com/advisor/life-insurance/whole-life-vs-universal-life-insurance/. Accessed May 16, 2023.
Content within this article is for informational purposes and does not constitute legal, tax or accounting advice regarding any specific situation. Coverage may not be available in all states. Benefits/premium rates may vary based on state and plan levels. Optional riders may be available at an additional cost. Policies/riders have limitations and exclusions that may affect benefits payable. For complete details, including availability and costs, please contact your local Aflac agent.
Aflac Coverage
Life (A68000 Series) – In Arkansas, Idaho, Oklahoma, Oregon, Pennsylvania, Texas, & Virginia, Policies: ICC1368100, ICC1368200, ICC1368300, ICC1368400. In Delaware, Policies A68100-A68400. In New York, NY68100-NY68400. Term and Whole Life (B60000 Series) – In Arkansas, Idaho, Oklahoma, Pennsylvania, Texas, & Virginia, Policies: ICC18B60C10, ICC18B60100, ICC18B60200, ICC18B60300, & ICC18B60400. Group Whole Life (Q60000 Series) – In Arkansas, Delaware & Oregon, Policy Q60100M. In Idaho Policy Q60100MID. In Oklahoma, Policy Q60100MOK. In Texas, Policy Q60100MTX. Group Term Life (Q60000 Series) – In Delaware, Policies Q60200M. In Arkansas, Idaho, Oklahoma, Oregon & Texas, Policies ICC18Q60200M, ICC18Q60300C, ICC18Q60400C.
Aflac coverage is underwritten by American Family Life Assurance Company of Columbus. In New York, coverage is underwritten by American Family Life Assurance Company of New York.
Tier One Coverage
Life (Final Expense Life) - In Arkansas, Delaware, Idaho, Oklahoma, Oregon, Pennsylvania, Texas, & Virginia, Policies ICC21-AFLLBL21 and ICC21-AFLRPL21; and Riders ICC21-AFLABR22, ICC21-AFLADB22, and ICC21-AFLCDR22.
Tier One coverage is underwritten by Tier One Insurance Company.
Coverage may not be available in all states, including but not limited to DE, ID, NJ, NM, NY or VA. Benefits/premium rates may vary based on state and plan levels. Optional riders may be available at an additional cost. Policies and riders may also contain a waiting period. Refer to the exact policy and rider forms for benefit details, definitions, limitations and exclusions.
Aflac’s family of insurers include Aflac, Aflac New York, Continental American Insurance Company, and Tier One Insurance Company.
Aflac WWHQ | Tier One Insurance Company | 1932 Wynnton Road | Columbus, GA 31999.
Aflac New York | 22 Corporate Woods Boulevard, Suite 2 | Albany, NY 12211
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