Level Term Life Insurance

Level term life insurance is a type of life insurance that offers consistent coverage over a specified amount of time. The face value of a level term policy stays the same for the duration of the period selected. Life insurance terms are ranged from one year to 30 years or more. Most commonly, however, level term coverage extends for 10, 15, or 20 years.

When you choose a level term life insurance policy, you select the sum insured (the amount you want paying out) and the policy term (the duration of cover). The sum assured is guaranteed at the outset and unchanged throughout the term of the life insurance policy.

Advantages of Level Term Life Insurance

The main advantage is that it is guaranteed to never increase, so you can budget for exactly what the premiums will be based on the plan duration. Also, a set term enables you to have the coverage for exactly as long as you need it.

Disadvantages of Level Term Life Insurance

One disadvantage is that this type of insurance only pays out about 1-2% of the time, so it is known as “renting” life insurance. Also, many people choose term life periods that are much too short and then the insured may face a very expensive decision when the term is up.

When deciding how long you need the policy to be in place, take in mind how long your children will be dependent upon you and when other financial benefits that will help support your spouse will kick in. You needn't pay to have coverage for longer than necessary, while you want to be sure to get coverage in place for long enough to keep your loved ones protected. Cost is also impacted by risk of death--age, risky behavior such as smoking, and health can all affect the pricing.