Benefits of buying Short Term Insurance

If you remember, before the advent of the internet, people used to purchase short-term subscriptions to a variety of services, such as newspapers and milk delivered to their homes. With the passage of time and the introduction of the internet, businesses like travel, health, and fitness, entertainment (OTT platforms), gaming, etc. started offering short term plans as well. These services are meant to cater to goals and lifestyle choices that are changeable and exist for shorter periods of time.

The same applies to the insurance industry also. It has numerous short term insurance plans which offer you a wide array of benefits to meet your immediate financial goals and liabilities. Let’s have a look at what short term insurance is and their benefits.

What is Short Term Insurance?

A term insurance plan that covers you for a short duration is referred to as a short term insurance plan.

For example, ABSLI Anmol Suraksha Kawach [UIN: 109N139V01] is a popular term insurance plan with a short policy duration. It covers you for a period of 2-5 years depending upon the period you choose. The plan provides you with a life cover and other benefits so you can safeguard your family against any immediate short-term liabilities in your absence. It provides financial protection to your loved ones at a budget-friendly premium.

How Does Short-Term Insurance Work?

To keep availing of the benefits of Anmol Suraksha Kawach, you need to duly pay all your premiums. You can either choose the single pay or regular pay option, depending upon your preferences.

→ Under the single pay option, you can pay the entire premium as a lump sum in a single go when you purchase the policy. This is usually a good option for people who have large yet erratic incomes, like businesspersons, etc.

→ Under the regular pay option, you can pay your premium regularly throughout the policy duration. This is a good choice for salaried employees, etc.

And, in return, the insurer will cover you for the duration you choose. If you pass away during the policy duration, your insurer will pay a death benefit (a fixed amount of money) to your nominee. If you survive the policy term, you won’t get anything back.

For example Suresh is a 50-year-old male who has a big house loan to be repaid within the next 4 years. His daughter will also be going to Australia for her higher studies in the next 2 years. To make sure his family achieves their financial goals and can easily repay the loan even in his absence, Suresh decides to opt for a term insurance plan with a short duration of 4 years and a cover amount of Rs 1.5 crores. He chooses the single-pay option and pays off the entire premium at policy inception.

Suresh, unfortunately, passes away within 2 years of the policy purchase. His family receives the death benefit of Rs 1.5 crores which they can use for financial goals, repaying loans, and other expenses.

Benefits of Buying Short Term Insurance

Short term insurance plans come with numerous advantages -

1.Easy-To-Understand

Short term insurance is a simple yet efficient way to protect your family’s financial future. All you have to do is pay your premiums on time to keep your policy active. If you pass away during the policy duration, your nominee will receive a fixed amount of money as a death benefit. It is the simplest way to ensure your loved ones’ financial protection.

2.Budget-Friendly Premiums

The premium is the amount that you pay to your insurance company to keep the policy and its benefits active. The premiums of short term insurance plans are low and pretty affordable.

3.Protection Against Immediate Financial Liabilities

A short term insurance policy is one of the best options for you if you have immediate financial responsibilities to settle. It's a way of securing the financial future of your loved ones without putting any monetary burden on their heads.

In case of your unfortunate demise, your nominee will receive the sum assured which will help them meet their milestones and settle any financial liabilities which might worsen after your demise. Without such a cover, your family will have to shoulder the burden of debt repayment or taking care of their financial goals like funding higher education, weddings, etc.

4.Highly Customisable

Short Term insurance plans can be customised as per your needs and preferences. Let’s see how -

Premium Payment Duration Under plans like Anmol Suraksha Kawach, you have two premium payment duration options to choose from - single-pay & regular-pay. Single-Pay: You can pay the entire premium as a lump sum when you purchase the policy.

Regular-Pay: You can pay your premium regularly throughout the policy duration.

Premium Payment Frequency

For plans like Anmol Suraksha Kawach, you can pay your premium on a monthly, quarterly, half-yearly, or annual basis - depending on your convenience.

Policy Term

You can customise your policy term as per your requirements and choose a policy term between 2-5 years if you buy the Anmol Suraksha Kawach. For instance, if a loan you’ve taken is to be repaid within the next 3 years, you can choose a short term insurance plan with a policy duration of 3 years so your loved ones are spared from the burden of arranging funds for the same if you pass away during the period.

Cover Amount

You can pick the cover amount according to your family’s needs and goals. For instance, when it comes to Anmol Suraksha Kawach, you can choose any amount from -

• Rs 50 Lakhs
• Rs 75 Lakhs
• Rs 1 Crore
• Rs 1.25 Crores
• Rs 1.5 Crores
• Rs 1.75 Crores
• Rs 2 Crores

5.Tax Benefits*

Under various sections of the Income Tax Act of India, 1961, tax benefits* for short term insurance can be availed for both the premiums paid and the claim amount received.

• Section 80C: You can avail of tax deductions up to Rs. 1,50,000 for the short term insurance premiums you pay every year.
• Section 10(10D)#: The claim amount that your family will receive in case of your demise is exempted from tax.

Conclusion

Insurance is a personal purchase and everyone wants different things from their insurance plan. With various short term plans like Anmol Suraksha Kawach available in the market, it is essential to evaluate your requirements to choose a suitable plan to safeguard your loved ones from financial stress.