All You Need to Know About Level Term Insurance

Level term insurance is a type of term insurance that offers steady premium options throughout the policy term, along with death benefits.

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Level Term Insurance: An Overview

Term insurance is the purest form of life insurance that offers death benefits. There are further divisions of term insurance plans to best suit the customer's requirements. One of the commonly availed plans is level term insurance. More or less, it's similar to a term insurance policy; however, it is generally called a level benefit. Because it guarantees fixed death benefits in the policy.

What is Level Term Insurance?

Level term insurance is considered as a cost-effective form of term life insurance plan. It ensures to pay the death benefit to the nominee in the event of the sudden demise of the insured during the policy tenure. 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 insurance. Commonly, the level term insurance plan lasts from 10 years to 30 years, depending upon the requirements of the policyholder.

Types of Level Term Insurance 

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

  1. Level Term 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 Insurance for 10 year

    This level term insurance is suitable for individuals who want to avail themselves for 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 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 level term insurance, the plans are also available for longer-term like 20 years or 30 years and also, for shorter-term of fewer than five years, 

Benefits of Level Term Insurance Plan

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

  • Predictability- 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 one doesn’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 in effortlessly budgeting everything. 

  • 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 the stability while paying the fixed premiums for the entire policy tenure.

  • Health Benefits- While buying the level term insurance if you are in sound health, you can avail of health benefits on this plan. No matter what policy tenure you’ve opted for, if you are healthy, you will receive coverage higher than 15, 25, or 30 years (depending upon your chosen policy tenure)

  • Yearly Renewal- This one comes with a policy with a longer policy tenure. As you grow old, the policy renewal happens every year. This means, the coverage allowances progress with each passing year. It is more like an auto-replenishment of your already existing plan.

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

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 the insured’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 5-30 years 1-30 years Whole life
Cost Cost-effective Cost-effective Expensive
Tax Benefit Comes with tax benefit Comes with tax benefit Comes with tax benefit

Why Should You Opt for Level Term Insurance Plan? 

Level term insurance plan pays a fixed amount that can be used by your family members to pay for any financial requirements. A level term insurance payout can help your dear ones to cover any day-to-day expenses, present education fees, mortgage/loans payments or any other type of money may owe. Also, these plans allow you to attach or add on the additional covers or riders such as critical illness, thus helping you in providing more coverage to your family. Level term plans are easy-to-understand protection-based policies, which enable you to protect the financial future of your family without hitting your pocket with payments of premium. No hidden charges are involved and they provide you peace of mind about your family’s protection in the future. 

Wrapping it Up

Level term insurance plan is the most preferred and cost-effective form of term life insurance policy. You can choose from the offered policy tenure i.e. 5, 10, 20, or even 30 years 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 insurance is, 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.

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