What is Level Term Life Insurance?

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. A 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 the 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.

How Level Term Insurance Works?  

• Fixed Premiums: The premium amount remains constant throughout the entire policy term.

• Stable Coverage: The sum assured (death benefit) is decided at the start and does not change over time.

• Defined Duration: The policy is active for a set period, such as 10, 20, or 30 years.

• Payout on Death: If the policyholder passes away during the policy term, the full death benefit is paid to the nominee without any reduction.

Why Should You Opt for Level Term Insurance Plan? 

When you may not be 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.

What are the Types of Level Term Insurance Policy?

These level term insurance policies generally offer the following types as discussed below:  

1. Traditional Level Term Insurance Plan

   A traditional level term insurance plan provides a fixed sum assured throughout the policy tenure. In this type, the premium and the coverage remain the same from start to end. If the policyholder passes away during the policy term, the nominee receives the agreed sum assured. However, if the policyholder survives the term, no maturity benefit is paid. This makes it one of the most affordable ways to secure a high cover for your family.  

2. Return of Premium (ROP) Level Term Insurance

   In a return of premium level term plan, the policyholder receives back all the premiums paid if they survive the policy term. This plan ensures that your money does not go to waste in case no claim arises, and your survive the policy tenure. This makes it a suitable choice for individuals who want both protection and a return of their premiums at the maturity of the policy.

What are the Key Features of Level Term Insurance?

The following are the key features of a level term life insurance plan:

• Straightforward Coverage
  Level term insurance is simple and transparent. The premium remains the same throughout the policy tenure, and the payout amount for your beneficiary is fixed. There are no hidden charges, making it easy to understand and manage.

• Guaranteed Payout
  In the event of the policyholder’s death during the policy term, the benefit is paid out as a lump sum to the nominee. The payout is usually tax-free, ensuring maximum financial protection for your family.

• Renewal Terms Once the policy tenure ends, the coverage also expires. Renewal options are available, but the premiums will be based on your new age and health status.

What are the Benefits of Level Term Insurance Plan?

By buying the level term life insurance plan, 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.

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 all the best term insurance plan in India.

Note: You should also check the benefits of term life insurance if you are planning to purchase the term insurance plan.

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