Short-term life insurance provides temporary coverage while you're waiting to get a longer-term policy to be approved, or to avoid gaps in coverage, like when you’re between jobs. Short-term policies usually last one year or less, unlike traditional term life insurance, which usually lasts for 10 to 30 years, or permanent life insurance, which never expires.
How does short-term life insurance work?
Short-term life insurance provides temporary financial protection during any period of transition where you want to avoid a coverage gap — whether you’re waiting for your insurer to come to a decision on a longer-term application, you're in between jobs, or working on improving your odds to get a better life insurance rate in the future.
Short term policies have their own set of limitations, like increasing premiums and coverage maximums, but in some circumstances, they can be the right fit for your needs.
Duration: Depending on the type of short-term policy, they can last between 60 to 90 days, or up to a year.
Maximum amount of coverage: Compared to traditional policies, short-term life insurance payout amounts are usually lower, between $250,000 and $1 million, depending on the life insurance company.
Premiums: Some insurers will draft your first month’s premium early to cover the temporary insurance. Other insurers will simply ask to have your banking information on file and only draft your premium if you die during the application process — assuming you’d been approved — and they need to pay out the death benefit.
Types of short-term life insurance
Short-term life insurance commonly refers to two types of policies: temporary life insurance and annual renewable life insurance. Both can offer you coverage for a short period of time but they serve different purposes.
Temporary life insurance
Temporary life insurance is a short-term coverage option offered by life insurance companies that provides some coverage while you wait for your longer-term or permanent policy to go in force.
Because the standard application process often requires a health interview and a medical exam, it can take one to two months to complete — sometimes longer if the insurance company requires additional information. Unless you have a temporary policy, you don't have any life insurance coverage until you sign your final policy offer and pay your first premium.
Temporary life insurance can’t be purchased on its own or in place of a long-term policy because it's tied to the policy you’re purchasing from your insurer.
Coverage lasts 60 to 90 days or until your application is approved or declined.
Premiums are based on the initial quote your insurer gave you.
If you have certain health conditions, you may not qualify for temporary coverage while you wait for approval. Health conditions that may affect your eligibility include:
Pre-existing conditions may not prevent you from getting life insurance altogether, but they may lead to a longer approval process or more expensive premiums. Working with an independent broker like Policygenius can help you find the life insurance company that’s going to be the best fit for you and your specific health profile.
Annual renewable life insurance
Annual renewable life insurance has a term length of one year and renews on an annual basis without having to take another medical exam.
It works similarly to term life insurance, but the premiums often start even lower than traditional term life and increase each year that you renew the policy.
You may want to consider an annual renewable life insurance policy if you anticipate changes to your life or health that will earn you lower premiums in the future. Examples include:
You’re trying to lose weight or have recently lost weight for health reasons.
You’re trying to quit smoking or are a former smoker.
You’ve been convicted of a felony and are waiting for your probationary period to end.
Annual renewable life insurance policies are convenient, but may also be more expensive than a comparable standard term life policy.
An alternative, and potentially more affordable, strategy is to apply for a term policy as you normally would. Many life insurance companies give you the option to apply for reconsideration if you undergo a lifestyle change that may considerably lower your rate, like quitting smoking. This way, you have the option to continue your existing coverage without applying again.
When to buy short-term life insurance
Short-term life insurance is designed to provide temporary coverage, not to replace a standard policy. Consider buying short-term life insurance under the following scenarios:
You’re waiting for a longer-term policy to be approved. It's best to get a short-term policy so that you have at least some coverage before you get standard coverage.
You’re in between jobs. If you rely on employer-sponsored coverage, like group life insurance, getting short-term life insurance can help avoid any coverage gaps during job transitions.
You want to cover a temporary debt or other financial obligation. Short-term life insurance can help your beneficiaries pay that debt in full should you die during that period of time.
You’re working on improving your health or lifestyle. Short-term life insurance can keep you covered while waiting to apply for better standard rates if you just quit smoking, recovered from a health condition recently, or if you’re currently working in a dangerous occupation that might increase your premiums.
Average cost of short-term life insurance
The cost of a short-term life insurance policy will vary based on your age, health, and whether or not you smoke.
Sometimes you can get temporary coverage for free during the application process — your agent will tell you if this is something offered by your insurance company. Other times it’ll cost you one month’s premium, which will be the same rate your agent quoted you. That payment is then put toward your first premium when you sign your final policy, so in the long run it isn’t costing you any extra money.
Annual renewable term policies, on the other hand, start slightly lower than level term life insurance policies, but their premiums increase every year.
The chart below, showing average monthly premium prices for 20-year term life insurance policies for non-smokers in good health, will give you an estimate of short-term life insurance rates.
Average estimate short-term life insurance rates by age and gender
Age | Sex | $250,000 coverage amount | $500,000 coverage amount | $1 million coverage amount |
|---|
25 | Female | $14.10 | $20.89 | $33.27 |
| Male | $17.03 | $26.69 | $44.40 |
35 | Female | $16.32 | $25.43 | $42.60 |
| Male | $18.48 | $30.15 | $51.70 |
45 | Female | $28.19 | $47.62 | $86.69 |
| Male | $35.95 | $60.54 | $112.95 |
55 | Female | $59.69 | $108.31 | $207.24 |
| Male | $82.46 | $150.12 | $283.12 |
Methodology: The prices displayed above are based on internal actuarial rate tables for nine life insurance carriers that offer policies through the Policygenius marketplace (AIG, Banner Life, Brighthouse, Lincoln Financial, Mutual of Omaha, Pacific Life, Protective, Prudential, and Transamerica). The prices represent the average monthly life insurance premium for each sample customer profile (age, gender) and policy type (term, coverage amount) as of February 1, 2023. Monthly averages are based on nine products available through Policygenius for the indicated profile; rates for those products may vary by state, and not all nine products are available in all states. Individual rates may vary, depending on age, gender, state, health profile, and other eligibility criteria.
Other types of term life insurance
Frequently asked questions
Can you cash out short term life insurance?
No. Short-term life insurance is term life insurance and therefore has no cash value, which is a savings component that only permanent life insurance policies have.
What is the difference between annual renewable and temporary life insurance?
Annual renewable life insurance is a standalone life insurance policy that you need to renew each year. Temporary life insurance is offered by insurers while your application for a long-term policy is processed.
Is short-term life insurance worth it?
Short-term life insurance is worth it if you want to avoid any coverage gaps in between jobs, while you wait for a standard life insurance you applied for to be approved, or if you’re working on improving your health to apply for better rates in the future.
