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Short-Term Life Insurance

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.

What is short-term life insurance?

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.

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Types of short-term life insurance

There are two main types of short-term life insurance:1

Temporary life insurance

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

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.

How much does short-term life insurance cost?

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

When should I get short-term life insurance?

Short-term life insurance’s temporary policy term makes it a good option for a few scenarios:

  • You’re waiting for approval on a long-term policy.
  • Your policy has a waiting period.
  • You’re in between jobs.
  • You want to cover temporary obligations, such as a loan.
  • You’re improving your health or lifestyle (such as quitting smoking) before getting a traditional life insurance policy.

Long-term life insurance policies to consider

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

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

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

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

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

Get life insurance from Aflac

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.

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