Level Term Life Insurance

Level Term Life Insurance

What is it?

Level Term Insurance is a type of policy which only pays out to your dependants if you die within a fixed period (chosen by you). If you should die outside of this pre-agreed time frame, there will be no pay out.

How does it work

The insurance premiums are fixed at the time you agree to the cover. You choose the the length of cover e.g 25 years and the amount of cover e.g £100,000. If you die in this time frame your dependants will receive the pay out. Level term insurance is beneficial if you know the specific amount your family will need as the pay out amount will not change throughout the term of the policy.

Reasons to take out this cover

  • If you have debts that need to be paid off in the event of your death.
  • Extra cover in place for your mortgage to be paid off when you die.
  • Leave a lump sum for your family.

There are lots of options available for level term insurance so make sure you only pay for the specific cover you  need or your insurance premiums could get quite high.

Risks to level term insurance

  • You may not require the same amount of cover your needed at the start. For example if you paid off your 10 year debt within 5 years of the policy, the amount cover (££) may feel too much meaning insurance premiums may have been excessive.
  • However if you died 2 years into the policy the cover (££) may be worth it.

Things to consider

  • Review your life insurance regularly especially if your circumstances change.
  • The older you are the more expensive insurance premiums will be.
  • Rather cancelling an existing policy it is worth considering if it is more cost effective to take out additional cover as a supplement.
  • If you cancel an existing policy before a new one has been put in place, your family will be without protection.