Level term life insurance is the cheapest form of life insurance and offers financial support to the beneficiary in case of the policyholder’s death within a specific period. There are two types of term life insurance, namely level term insurance and decreasing term insurance. While in decreasing term, the death benefit amount declines with time, it remains constant in level term life insurance. This characteristic of level life insurance has made it the more popular of the two.
Level term insurance is one form of life insurance through which one can secure steady financial protection for his/her family over a specific period. Irrespective of the inflation rate and any change in the policyholder’s circumstances, the face value of a level term life insurance policy remains unchanged through the term.
Level Term Life Insurance: Premium
The duration of level term life insurance policy can range from one year to thirty years. However, the common coverage periods for this form of life insurance are ten, fifteen and twenty years. The premium for this policy type is directly proportional to the duration of the coverage.
Other factors that influence the premium for level term insurance are:
The insurance company’s rules and regulations
The age of the policyholder
Occupation
Lifestyle
Health condition
The premium for level term life insurance is usually lower than that of the whole life insurance policy. It is even lower than renewable term policies.
Level Term Life Insurance: Other Information
Level term life insurance has most of the characteristics of term insurance, including the fact that it offers financial cover only till the expiry of the term. Since this characteristic affects the uptake of the policy, some insurance companies have modified this feature to include a “return of premium” aspect. This enables policyholders to renew this policy at a rate guaranteed at the time the policy was bought. This characteristic of level term life insurance is useful when the health of a policyholder declines significantly during the term of the policy.
Other points that you must keep in mind for level term life insurance are:
Just like term insurance, level term insurance does not contain a cash value.
The beneficiary of level term insurance receives a lump-sum amount in case of the death of the policyholder.