Level Term Life Insurance

Level term life insurance provides cover for a set frame of time and guarantees a fixed lump sum payout. It is beneficial for people who have children or a spouse, as the lump sum payment will be paid out should the policy holder die within a fixed period of time. The word ‘term’ refers to the period of time covered by the policy, while the word ‘level’ refers to the fixed sum of money that will be paid should the policy holder pass away.

Who should opt for level term life insurance?

Level term life insurance is a good idea if you are married or have children. If you are single and have no dependents, other forms of insurance, such as critical illness cover, may be preferable. The idea of level term life insurance is that it guarantees a fixed sum of money if the policy holder expires. The amount of money and the term (a fixed period of time) are agreed by the holder of the policy and the insurance provider. Most people don’t like to think about what they would do if their partner or spouse passed away, but getting life insurance is a good idea as it will help to relieve financial stress and worries and make life easier in the future, in the unfortunate circumstance of a close person dying. The money paid out can be used for household bills, paying the mortgage and bringing up children.

It is important to study your policy details carefully. Level term life insurance is not to be confused with mortgage term assurance, which pays off your mortgage if the policy holder passes on, and whole of life insurance, which is mainly recommended for those who will be affected by inheritance tax.

How much does level term life insurance cost?

The cost of level term life insurance varies as per the policy you have. A general rule is: the longer the term and the higher the payout, the higher the premium. Premium costs may also be affected by your age, occupation and health. If there is a high risk of the holder of the policy expiring (for example, if they are over the age of 60, they smoke and they have a dangerous occupation), the premium is liable to be higher. If you take out a level term policy that covers your children, this should last until they reach the age of 18 when they are no longer considered to be dependents.

It is important to be honest when you apply for level term life insurance and you must declare truthful information, or you could be refused a payout on the grounds that you did not disclose the relevant information.

If you are aged over 50 it may be wise to consider a life insurance policy designed specifically for people over this age, as these policies require less information about your health and they are guaranteed to accept customers under the age of 80.

Life Insurance

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