Life insurance supports the loved ones you may someday leave behind. However, it may not always be an ideal time to commit to a 30-year or lifetime life insurance policy. In that case, you may be looking for short-term life insurance options to give you peace of mind.

As you review the many life insurance policies available to determine the best choice to support loved ones decades from now, a short-term life insurance policy can bridge the gap.

What is short-term life insurance?

Short-term life insurance is a type of life insurance that lasts for a shorter period than a standard term or whole life insurance policy. Generally, short-term life insurance policies expire in less than a year.

Short-term life insurance aims to prevent temporary gaps in life insurance coverage that could leave your loved ones without sufficient financial means to support themselves. It can alleviate some of the financial worries if a longer-term life insurance policy is pending or under the following circumstances:

• You’re between jobs
• You’re temporarily working in a risky profession
• You’re actively changing your lifestyle habits
• You want to cover a short-term debt

Once these circumstances change, you may find that a longer-term life insurance policy is more cost-effective.

How does short-term life insurance work?

Short-term life insurance works much like a standard term life insurance policy in that it provides a specified death benefit to your beneficiaries if you pass away before the end of the term. Your beneficiaries can then use the funds in any way they choose. They may decide to pay for funeral expenses, cover debts, or fund other living expenses.

In some cases, you may be able to renew your short-term life insurance policy without re-qualifying or taking another medical exam. However, the premium will likely be higher because you’ll be older at the time of the renewal, and premiums increase with age.

There are four potential drawbacks to a short-term life insurance policy:

• Coverage may be limited to a term of 60 to 90 days or a year at most.
• The maximum coverage typically ranges between $250,000 and $1 million.
• You may not qualify for a short-term policy if you have certain health conditions.
• The premiums generally increase with each term and can be cost-prohibitive with repeated renewals.

When might you need short-term life insurance?

A short-term life insurance policy can help ease the strain if you are experiencing any of the following life circumstances.

A long-term life insurance policy is pending

Life insurance coverage doesn’t go into effect until you’ve completed the application, received approval, and paid the premium. With many life insurance companies, approvals can take six to eight weeks. Although some companies will offer short-term coverage while the application is processing, approval can happen in days rather than weeks at Fidelity Life. This rapid processing may reduce the urgency of needing short-term life insurance.

A licensed insurance agent can help you find life insurance policies that offer quick approval if you meet eligibility requirements.

You’re in between jobs

Employers commonly offer group life insurance policies to their full-time employees, but they’re rarely portable if you leave. That means if you lose your employment for any reason, you also lose your life insurance policy.

Short-term life insurance provides coverage until you get another job that has group life insurance or you purchase a standalone policy.

You’re working short-term in a higher-risk profession

When you apply for life insurance, the insurance company will develop a risk profile for you, which includes your occupation and its risks for your life expectancy.

Risky occupations such as race car drivers, pilots, roofers, loggers, and drivers will have a more difficult time getting life insurance and reasonable rates than workers with less risky jobs.

However, short-term insurance can help provide financial peace of mind if you’re working temporarily in a risky career. For example, suppose you’re working as a temporary, seasonal wildland firefighter. In that case, you may want coverage during those months but not be willing to commit to a longer-term policy at the same rate. Once the job is complete and you move into a lower-risk profession, you can likely secure life insurance for the long term at a more favorable rate.

You’re actively changing your lifestyle habits

Your health is a factor when you apply for certain types of life insurance. And certain health conditions could result in higher rates or outright denial of coverage.

If you’re actively losing weight or quitting smoking, you’ll likely have a better chance of getting approved and securing a better rate once you’ve achieved those goals.

You want to cover a short-term debt

A concern that may weigh heavily on your heart is passing away unexpectedly and leaving your family with a massive debt burden. It can be especially painful to consider loved ones having to manage that during a period of grief. If you’re working to pay off a significant debt that will be gone in the next few months to a year, a short-term life insurance policy could help provide peace of mind.

What are the types of short-term life insurance

Short-term life insurance is available in two forms: temporary life insurance and annual renewable life insurance.

Temporary life insurance

Some life insurance companies feature a temporary insurance agreement (TIA) as part of the application process. This means the applicant receives temporary life insurance until the application goes through underwriting and gets approved. The death benefit is generally equal to the limit the potential insured applied for, and the TIA expires if the application is denied.

Annual renewable life insurance

Annual renewable term life insurance (ART) is a type of term life insurance policy that has the option to renew every year. With this policy, you won’t need to take a new medical exam at the renewal, and you can lock in your premium for an entire year. However, the premium typically increases with each renewal.

In partnership with Progressive, Fidelity Life offers RAPIDecision Life One℠, an annual renewable life insurance policy with a one-year term that allows you to renew each year if desired.

How much does short-term life insurance cost?

The cost of short-term life insurance will vary depending on the policy terms, coverage amount, and insurer. The best way to determine the cost of life insurance for any coverage length is to get a quote.

If you’re looking for an affordable short-term life insurance policy, you may pay as little as $7 per month for $50,000 in coverage for a one-year term with Fidelity Life. A licensed insurance agent can offer the best quote based on age, health, and lifestyle.

Alternatives to short-term life insurance policies

While a short-term life insurance policy works well in certain situations, a term or permanent life policy may better serve you and your loved ones over time.

Term life insurance

Term life insurance is a life insurance policy that lasts between 10 and 30 years. Because term life coverage expires once the term ends, these policies are generally more affordable than permanent coverage.

Permanent life insurance

Permanent life insurance lasts a lifetime as long as premiums are paid. These policies can also accumulate cash value in addition to the death benefit. The cash value component of permanent life can be used during your lifetime if needed.

Is a short-term life insurance policy right for you?

Whether or not a short-term life insurance policy is right for you depends upon your unique needs and budget. A licensed life insurance agent will consider your life circumstances and help you find the best policy to protect your family. Contact Fidelity Life today.

FAQs about short-term life insurance

What is the shortest-term life insurance you can get?

The shortest-term life insurance you can get is temporary life insurance. The insurance applies for a few weeks to a couple of months until a longer-term policy gets approved. Many insurers offer term life coverage for ten years as the shortest term.

Can you cash out a short-term life insurance policy?

There is no way to cash out a short-term life insurance policy as it does not accumulate cash value while the policy is in effect. Short-term life insurance is often term coverage, which doesn’t accrue cash value the way permanent life insurance does.

Can you get life insurance for one month?

You’ll need to work with your insurer to understand life insurance options for one month. If you’re awaiting approval for a longer-term policy, the insurer may offer short-term life insurance for one to two months or until the policy is finalized.