When Should You Consider a Short-Term Health Insurance Plan?

February 20, 2012

The Basics

Short-Term health insurance is just what it sounds like, insurance coverage for a very specific, or “short” amount of time. This of course, is different from the traditional, open ended, coverage provided by standard insurance policies, which stays in force until the insured cancels or stops paying the premium.

Generally a Short-Term policy can be purchased for up-to six months at a time and features a much quicker application and underwriting process. While a traditional insurance plan requires extensive medical information and can take as long as two to three weeks to be approved. Short-Term insurance requires the completion of four or five medical questions and can be processed within 24 hours.

The Benefits

Short-Term insurance is never going to be confused with a “top of the line” insurance plan. Its coverage will vary from company to company and generally feature a wide range of deductibles, however it will most likely have reduced coverage compared to standard plans. The biggest omission is the exclusion of all pre-existing conditions. That means anything you have been previously treated for will not be covered by a short-term policy.

The Need

Chances are you might never run-in to a situation that would require, or make sense for you to purchase short-term health insurance. However there are a handful of areas where this type of coverage can be a life saver.

The first and most common need is for someone who is between jobs. While stints of unemployment seem endless these days, short-term coverage is flexible enough to handle even the most extended hiatuses from the workplace.

This type of coverage is also great for recent graduates who might have a short period of time to fill until they can jump on their new employers health plan.

Lastly, short-term coverage can also come in handy for someone who has been declined for a standard health insurance plan. Because the policy has a very general application process and time of coverage is only guaranteed for a set amount of time, this allows someone with moderate health issues to get coverage.

The Cost

Of course, probably the most important benefit of all is that short-term health insurance is going to be much easier on the wallet. Because of the limited benefits we discussed earlier and the specified duration of coverage, monthly premiums are only going to be a fraction of the cost of standard insurance plans.

Again, chances are most people might never find the need for such a policy. However if you do find yourself in a situation where short-term coverage makes sense, it is a very affordable way to provide you with the protection you need.