Why Should I Choose a Level Term Insurance Plan?
Published On Mar 03, 2022
Confusingly, level term life is sometimes used to talk about a policy with a premium that doesn’t change over its life. This is actually a level premium term life insurance policy, but it’s often referred to as just level term life insurance.
The two options usually go hand in hand: a level death benefit with level premium payments. Most of the "normal" term policies available today are some flavor of level term life. You should clarify which product you want when talking to a life insurance agent or when shopping online.
Benefits Of Level Term Life Insurance
Predictability is the main benefit of level term life insurance. You know how much you’ll be leaving to your beneficiaries no matter when you die, as long as you don’t outlive your policy. This means you — and they — can make plans with a single value in mind.
Since level benefits often mean level premiums, budgeting is also easy. The amount you pay for your second year of coverage is going to be the same as the amount you pay for your 12th year of coverage, assuming you don’t make any changes to your policy.
Level term life also allows you to take advantage of your good health. Since you’ll be paying the same amount and receiving the same coverage throughout the life of the policy, you can get 10, 20 or even more than 30 years of coverage based on your current health.
One of the alternatives to level term insurance is annual renewable term life insurance. These policies are renewed each year, with rates going up as you get older. Insurers usually won’t require additional health exams between renewals, but the price you’ll pay isn’t always fixed and can increase along with inflation.
This laddering system gives you automatic reductions in coverage as your needs decrease because your policies will end. As you drop policies, your total premium paid will go down as well.
Disclaimer: This article is issued in the general public interest and meant for general information purposes only. Readers are advised not to rely on the contents of the article as conclusive in nature and should research further or consult an expert in this regard.