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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 help provide coverage for a shorter period than traditional life insurance policies. Coverage typically lasts no longer than one year.1
Short-term policies typically work 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 coverage from Aflac.
There are two main types of short-term life insurance:1
Temporary life insurance is designed to help 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.
Short-term life insurance’s temporary policy term can be 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 helps cover 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 reasonable relative to the death benefit.2 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 access 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.2 That said, Aflac’s whole life insurance policies can offer added 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 reasonable premiums, lifelong coverage, and cash value. Additionally, this type of policy doesn’t require a medical exam. However, the death benefit is smaller. Typically, these policies can provide a death benefit that usually range from $2,000 to $50,000.3
The median cost of a funeral is $8,300.4 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 helps offer 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.5
At some point, you may temporarily lose your life insurance coverage as your life changes. Short-term life insurance policies help 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 help provide coverage at a reasonable 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 – What is short-term life insurance? Updated July 08, 2024. https://www.bankrate.com/insurance/life-insurance/short-term/. Accessed October 9, 2024.
2 Forbes – Term vs. Whole Life Insurance. Updated August 21, 2024. https://www.forbes.com/advisor/life-insurance/term-life-vs-whole-life-insurance/. Accessed October 9, 2024.
3 MarketWatch – Final Expense Life Insurance: Do You Need It? Updated September 10, 2024. https://www.marketwatch.com/guides/life-insurance/final-expense-life-insurance/. Accessed October 9, 2024.
4 USA Today – How much does a funeral cost in 2024? Updated April 10, 2024. https://www.usatoday.com/money/blueprint/life-insurance/how-much-does-a-funeral-cost/. Accessed October 9, 2024.
5 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 October 9, 2024.
Content within this article is provided for general informational purposes and is not provided as tax, legal, health, or financial advice for any person or for any specific situation. Employers, employees, and other individuals should contact their own advisers about their situations. For complete details, including availability and costs of Aflac insurance, please contact your local Aflac agent.
Aflac coverage is underwritten by American Family Life Assurance Company of Columbus. In New York, Aflac coverage is underwritten by American Family Life Assurance Company of New York.
Aflac life plans - B61000 series: In Arkansas, Idaho, Oklahoma & Virginia, Policies: ICC18B61JWO & ICC18B61JTO. In Delaware, Policies B61JWO, B61JTO. B60000 series: In Arkansas, Idaho, Oklahoma & Virginia, Policies: ICC18B60C10, ICC18B60100, ICC18B60200, ICC18B60300, & ICC18B60400. Not available in Delaware. Q60000 series/Whole: In Arkansas & Delaware, Policy Q60100M. In Idaho, Policy Q60100MID. In Oklahoma, Policy Q60100MOK. Not available in Virginia. Q60000 series/Term: In Delaware, Policies Q60200CM. In Arkansas, Idaho, Oklahoma, Policies ICC18Q60200C, ICC18Q60300C, ICC18Q60400C. Not available in Virginia.
Aflac Final Expense insurance coverage is underwritten by Tier One Insurance Company, a subsidiary of Aflac Incorporated and is administered by Aetna Life Insurance Company. Tier One Insurance Company is part of the Aflac family of insurers. In California, Tier One Insurance Company does business as Tier One Life Insurance Company (Tier One NAIC 92908).
In AR, DE, ID, OK and VA: Policies ICC21-AFLLBL21 and ICC21-AFLRPL21; and Riders ICC21-AFLABR22, ICC21-AFLADB22, and ICC21-AFLCDR22. Aflac Final Expense policies are not available in New York.
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 does not offer Universal or Variable Universal Life Insurance.
Aflac WWHQ | Tier One | 1932 Wynnton Road | Columbus, GA 31999.
Aflac New York | 22 Corporate Woods Boulevard, Suite 2 | Albany, NY 12211
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