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What is Level Term Life Insurance?

Level Term insurance is a type of life insurance plan where the policyholder pays a fixed premium of term insurance throughout the policy term. Simply put, the cover amount is called ‘Level’.Let’s understand this in detail:

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What is Level Term Insurance Policy?

Level term insurance policy is a type of term plan where if the life assured were to pass away unexpectedly during the effective period of policy, the beneficiary would receive the life cover in the form of a death benefit. Level term insurance policy is a cost-effective form of term life insurance plan. This plan pays death benefits to the nominees/beneficiary in case of an unfortunate death of the policyholder during the whole policy term. This simply means that you can secure the financial future of your family members without disturbing your monthly budget with excessive payment of premiums. 

Also, it is known as a 'level premium term plan' - when the policyholder pays fixed premiums throughout the policy tenure. Thus, the premium and the death benefits remain the same in the level term life insurance. Commonly, the level term insurance policy lasts from 10 years to 30 years, depending upon the requirements of the policyholder.

Note: Now that you know that what is Level Term Insurance Policy, you should also get to know about what is term insurance to buy a term plan for your loved ones.

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Why Should You Opt for Level Term Insurance Plan? 

When you may not be available around to take care of your family members, a level term insurance policy will pay the death benefit payout to your nominee or family members to fulfil the financial obligations they have. A level term plan payout can help your dear ones cover any other day-to-day expenses, education fees, or outstanding loan repayments. Also, these plans allow you to attach additional covers or riders, such as critical illness, thus helping you provide large coverage to your family. 

It gives you peace of mind by covering expenses such as education bills, household bills, etc., in case of your absence. 

Note: It is suggested to calculate the term plan premium on the term insurance calculator online tool by Policybazaar before buying.

Types of Level Term Insurance Policy

These level term insurance policy generally offer a number of policy term options that are discussed below: 

  1. Level Term Life Insurance for 5-year

    This type of level term insurance is for 5 years of tenure. This is majorly beneficial for those individuals who are looking out for insurance coverage only for a short time period. For instance, this plan can be availed by an individual whose retirement is in the next coming 5 years or maybe an individual who has just graduated from high school or started doing any job. 

  2. Level Term Life Insurance for 10 year

    The 10 year level term insurance is suitable for individuals who want to avail themselves of decade-long term coverage. This plan is generally taken by parents whose children are growing up, and they need some amount for their child’s future, such as for higher education. 

  3. Level Term Life Insurance for 15 year

    A 15-year level term plan might require a high amount of premium. However, it also covers the life assured for a long time. These plans are specifically suitable for individuals with long-term financial objectives. 

    Apart from the above-mentioned types of term insurance, the level term life insurance plans are also available for longer-term like 20 years or 30 years and also, for shorter-term of five years.

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Benefits of Level Term Insurance Plan

By buying this policy, the policyholder can avail the following benefits:

  • Affordable Premiums- Level term life insurance plans are one of the most affordable types of term insurance through which you can secure a large life cover at budget-friendly premiums.

  • Flexible Tenure- Level term life insurance plans offer a variety of policy terms for you to choose from. You can select the policy term as per your needs, starting from 5 years to the policy term covering till 99/100 years of age.

  • Rider Benefits- By adding the available term insurance riders to the base plan, you can enhance the base level term insurance coverage against critical illnesses, terminal illnesses, accidental death, accidental disability, waiver of premiums, and hospicare benefits.

  • Stability- The level term insurance plan comes with stability. The very fact that the coverage will remain the same keeps the policyholder stress-free about the future. Also, one can sense stability while paying the fixed premiums for the entire policy tenure.

  • Health Benefits- While buying the level term life insurance, if you are in good health, you can avail of health benefits on this plan, like higher coverage at affordable premiums.

  • Tax Benefits - Level term life insurance plans offer tax benefits as per the prevailing tax laws u/s 80C and 10(10D) of the Income Tax Act, 1961.

  • Easy to Understand- This policy is very basic and direct to understand. Here, the policyholder will always be aware of how much he/she will leave for the beneficiary as long as they don’t outlive the policy. 

  • Effortless Budgeting- With the level premium option, it will be a lot easier for the policyholder to afford the policy alongside other livelihood expenses. Also, the maturity amount can be fixed by the mutual decision between the insured and the insurer. This helps the policyholder effortlessly budget everything. 

Level Term Insurance, Decreasing Term Insurance, and Whole Life Insurance: A Comparison

Many wonder if level term plans are the right option for their lives. Therefore, to help you make an informed decision, here is a comparison between level term life insurance, decreasing term insurance, and whole life insurance plans.

Features Level Term Insurance  Decreasing Term Insurance Whole Life Insurance
Death Benefit Death benefit remains unchanged throughout the entire plan Decreasing death benefits with each passing year Stays active for life assured’s entire life with a guaranteed death benefit
Premium Type Fixed premiums for the entire policy term. Decreasing premium for the entire policy term. Level premium/increasing premium for the entire policy.
Duration 5-40 years 1-30 years Whole life (till 99/100 years)
Cost Cost-effective Cost-effective Slightly Expensive
Tax Benefit Comes with tax benefit Comes with tax benefit Comes with tax benefit

Wrapping it Up

Level term insurance plan is the most preferred and cost-effective form of term life insurance policy. You can choose the suitable policy tenure as per your requirements and financial goals. However, it is advisable to always opt for a policy with longer-term to avail the maximum coverage. The best part about level term life insurance is that you do not have to worry about the increasing premium or decreasing sum assured. With the right approach and budget, you can ensure higher coverage for your loved ones with the level term insurance.

Note: Check out the best term insurance plan in India and choose one that suits your requirements.

FAQs

  • Q: What is level term insurance policy?

    Ans: To answer what level term insurance policy is, it is a type of life insurance in which the life cover and the premium rates remain the same throughout the policy tenure. You can buy these plans online based on your suitability.
  • Q: Is level term life insurance right for me?

    Ans: A level term life insurance is designed to fit the needs of a wide range of individuals and their varying requirements. In case you are the main breadwinner of the family, then a level term life insurance can ensure the financial security of your loved ones. Your family can use the claim amount in your absence to pay for their rent, child’s fees, and take care of any remaining loans.
  • Q: What happens when level term life insurance expires?

    Ans: When the level term life insurance expires, all the benefits and coverage offered under the plan ends. In case you have opted for term return of premium plans, you may receive the paid premiums back at the end of the policy.
  • Q: What are the benefits of level term life insurance?

    Ans: Here is a list of all the benefits offered under the level term life insurance plans:
    • Budget-friendly premiums
    • Long policy tenure
    • Flexible premium payment terms
    • Provides guaranteed death or maturity benefit
    • Tax benefits
  • Q: Can you extend level term life insurance?

    Ans: Most insurers do not allow the extension of policy terms in level term life insurance. However, you can check out the policy T&Cs of your desired term plan or confirm with the insurer to get a better idea of the inclusions and exclusions within a specific plan.

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