Index | Life Insurance | Level Term Insurance
Level Term Insurance
Level Term Insurance is a type of Term Life Insurance under which both the premium and the face value remain the same throughout the premium-paying period you select for yourself, be it 5, 10, 15, 20 or 30 years. Quite naturally, the period of coverage is predetermined by an individual need for Life Insurance and the death benefit is influenced by potential needs of the family in the event of the insured's death as well as the present day financial obligations, such as mortgage payments or education expenses.
It is of prime importance that with this plan you are the one to choose the amount of coverage you need and to determine the number of years the policy will be in force. However, it is important to remember that once the term period is selected, it cannot be changed. If the insured dies within the term of coverage, the insurance company will pay out the designated dollar amount equal to the face value of the policy to the beneficiaries named in the contract. For example, if the Level Term policy is for 100$, the same amount will be paid out at any time the insured dies.
Level Term Insurance does not have a cash value feature, therefore, if the term of the insurance is over and the sum has not become payable, your policy expires. Since the policies of this type are not of an investment type, you do not need to purchase more than you really need. The rough estimate goes like this: add up all your monthly expenses, including food and incidentals, and determine your financial needs for one year, then multiply the resulting figure by five. This is the minimum amount of Life Insurance you should have. On average, Level Term Insurance can be purchased at the lowest price in comparison to other types of Life Insurance and it is notable that it offers the largest coverage amount for such a premium cost.
At present most insurance companies try to extend the coverage they offer, thus catering to the customers' needs. A natural effect is a viable combination of different types of coverage. For example, the level term provision can be an additional feature of Renewable Term policies or Convertible Term policies. Therefore, it is very important to check out all the options and the plan's designs available under the contract of this type before making your final choice.
Thus, many insurance companies nowadays offer their customers an opportunity to convert a Level Term Insurance policy into a cash value Life Insurance policy.
With a Level Term Insurance policy you may also have an opportunity to set up a joint policy - the policy that covers two people simultaneously. The death benefit is paid out if either of the two insured persons dies.
Another option that is possible with a Level Term Insurance policy is when it is combined with critical illness coverage. Under this provision the insured will be paid out the amount of the coverage if he/she is diagnosed as terminally ill with a life expectancy of less than a year.
One more option offered under Level Term Insurance contracts allows you to protect your monthly premium if you are unable to work due to an illness or an injury.
A Level Term Insurance plan is certainly for people who know that they need coverage for a limited period of time. You can also resort to this coverage if you are a small business owner and you realize you need to cover a short-term risk to save your business or to ensure that your partners will be in charge of your business, should you pass away, and your family will be provided for through your business share purchased by your partners.
A larger amount of coverage and affordable premiums which remain stable throughout the term of coverage are the two distinctive features of this type of Life Insurance that make it popular with people of different ages, occupations and social backgrounds. When choosing a Life Insurance policy, remember that with Level Term Insurance you can provide a solid term protection and ensure a secure future for your family. Yet it is important to check and double check everything before you take a decision as this plan may not be available in your state or may not have a rider you are interested in.