What is a level term insurance policy?
People take out term insurance policies to make sure that their remaining family can keep up with mortgage repayments in the unfortunate event of their death. Level term life insurance lasts for a set period of time before it expires, something that you get in any term policy. What adds a twist to it is the word ‘level’, the premium rate stays the same for the entire life of the policy and the death benefit also stays the same. So, what is a level term insurance policy ? It’s the most common form of insurance policy as the policyholder doesn’t have to worry about the premiums varying from month to month or year to year. They can also relax without having to worry about the death benefit changing from the policy’s inception to its expiration, and there is no cash value or fees to take into account.
What best answers the question, “what is a level term insurance policy”, is the fact that this is the best option for anyone looking for a basic financial safety net to ensure that their loved ones are secure in the event of the death of the primary breadwinner. When you take out a level life insurance policy, you will have to set a term at the beginning, usually around 25 years and a pay-out size. This pay-out will be the same whether you expire at the beginning or end of the policy term. People in this position will generally set the term same as that associated with the mortgage. If you’ve got a repayment mortgage then this has an added benefit is later in the term when a claim is made, the more money there is to be paid out in excess of that which is left on the mortgage, leaving substantial spare cash for your loved ones.
The price of the premiums will depend on various elements. First, it is your health. Your family medical history and the general riskiness of your lifestyle, take for instance, whether or not you smoke. Second, the length of the term you choose and the size of the pay-out you want will set the amount you pay for your premiums. Generally, level term life insurance policies come with guaranteed premiums, which means that they will stay the same throughout the course of the policy’s term. This is as opposed to the reviewable premiums, which are subject to change according to various factors such as general changes in the insurance market and inflation. The same goes for any other household or personal debts you may have and not just mortgages.
However, level term life insurance is not just for debts, you may simply want to leave a certain amount of money for your family to help them cope financially during the most difficult times. If you still have doubt as to what is a level term insurance policy, it is important to bear in mind that should you live beyond the length of the policy term, you will no longer be protected in the event of your death. And if you wish to open up a new policy to continue cover, it will be more expensive due to your increased age.
Here are a few important things you need to know about level term life insurance policies:
- The death benefit stays the same throughout the policy.
- The premium stays the same the whole time you own it.
- It is an inexpensive form of life insurance coverage.
- It does not last your whole life and expires.
A level term policy may be renewable at the end of the policy tenure for a highly increased rate but this is not guaranteed. People buy this type of life insurance because the benefits and costs are predictable and affordable. When people talk about term life insurance policy, they generally refer to level term as it is by far the most common type of term policy sold. Last but not the least, you can get a really good deal on a level term policy compared to whole life or universal life but at the same time you sacrifice some good features.
It is essential to understand the different instruments of term policies before one goes ahead with a single plan. For those wondering, What is a level term insurance policy, this is a must read. The Future Generali Flexi Online Term Plan encompasses all of tax benefits and offers life insurance cover of Rs. 1 crore with premiums amounting to just Rs. 16 each day.