What Is Level Term Life Insurance?

Life insurance policies wherein the premium payments stay the same throughout the entire term, and the death benefit is paid in full, no matter when in the term you pass, is called level term life insurance.

Often both the level premiums and level benefits are combined in a single plan. However, this is not always the case. Sometimes a plan will have one or the other.

In this article, when we refer to “level term life insurance”, we will be referring to the common policy where the premiums and death benefit are both levels.

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Features of Level Term Life Insurance Plans

Here is a list of the important features of a level term life insurance plan to keep in mind:

Affordable compared to other types of life insurance
Premiums stay the same throughout the entire term
Tax-free death benefit is paid in full to the beneficiaries by the insurance provider
Must pass a Life Insurance Medical Exam to qualify
You can choose the length of your policy term (between 5 and 30 years)

Benefits of Level Term Life Insurance

There are plenty of reasons that customers love level term life insurance policies. Here are some:

Affordable: Level term life insurance policies cost significantly less than other types of life insurance. You can receive a $250,000 death benefit by paying under $40 per month, depending on your age and lifestyle.
Flexible Terms: With level term life insurance, you are able to select how long you want the term to last. You can choose anywhere between 5 and 30 years, as long as you stay on a multiple of 5 (5, 10, 15, 20, 25, 30).
No Surprises: The defining factor of level term life insurance is its reliability. It’s easy to make and keep a budget when you know that your premiums will not change. And in the event of your passing, your loved ones will not be left surprised at any fine print that interferes with their benefit.

Because of all these great features, a level term life insurance plan is a great fit for people who:

Are raising families
Have a mortgage
Healthy people who want to be prepared
Are on a budget

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When Level Term Life Insurance Isn’t the Best Fit

That said, this type of policy isn’t for everyone. The following are some reasons why a level term life insurance plan may not be a good idea:

No Cash Value: For some, this may be a pro because they do not have to pay the additional fees that come with a cash value policy. However, for those that appreciate the extra features that cash value policies offer, this is a con.
Term Ending: When you outlive your policy, you will have to either renew or purchase a new policy. This renewal or new purchase will be more expensive due to your increased age and possible added health conditions.
Difficult to Qualify For: If you are of old age or have some existing health problems, chances are that you cannot qualify for Level Term Life Insurance.

Riders for Level Term Life Insurance

Riders are additional coverages or features you can add to your insurance policy. These are a couple that you may wish to add to your level term life insurance plan:

Guaranteed Renewability: This rider means that you will be able to renew your policy on a year-to-year basis, no matter what other health complications come up. However, the price of your renewed policy will likely increase.
Waiver of Premium: This rider allows you to keep your policy in effect even if you become disabled or cannot work. The funds from your rider purchase will go towards covering your premiums when you are unable to.

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Purchasing Level Term Life Insurance

Buying a level-term life insurance policy is just like any other insurance policy. You simply have to shop around by researching different policies at different companies. Then, when you find the right one for you, contact that provider about their level term life insurance plan.

Margaret Huntley Margaret Huntley is a creative writing and philosophy student at Western University. She has been working as a freelance writer for over two years and has written about everything from insurance, to poker, to health and wellness for international businesses.