Level term life insurance. How does it work?
Level term life insurance can often provide a solution for a variety of financial protection needs. These policies can be particularly beneficial for those who have a shorter time line for coverage objectives, such as the payoff of a home mortgage.
What is a level term
This type of policy allows the death benefit and the premiums to remain level thought-out the entire policy period. As with other types of life plans, these policies provide death benefit protection only, with no cash value or savings component. Because of that, the level premiums on a term policy will usually be more affordable than a permanent plan with the same face amount.
Most carriers offer level term life policies with various term lengths. For instance, the available policies may provide coverage for 10 years, 20 years, 25 years, or even for 30 years.
How does it work
As its name suggests, level term life insurance offers a set (or level) amount of death benefit coverage for a certain amount of time. Also, the premium that is charged on a level term policy will typically remain fixed for the entire life of the coverage. Because of that, it can be easy to budget for the premium expense.
How much does it cost
The cost of a level term life insurance rates can depend on a number of factors, such as the:
- Amount of coverage
- Length of the policy
- Age and health condition of the insured
- Additional riders that are added (if any)
- The carrier that is offering the policy
Learn More: Average Cost of Life Insurance
Who can get it
Many companies offer level term coverage for applicants who are age 65 or younger. While many term life policies will require the applicant to go through the underwriting process (which often includes taking a medical exam), there are some carriers that provide no exam term life coverage.
With these policies, a significant amount of coverage can still be purchased, without the applicant having to provide a blood and urine sample to the company for testing.
What happens at the end of a level term life insurance policy
What happens at the end of a level term plan can depend on the type of policy purchased, as well as the various options that are available with it. For instance, in some cases, the coverage will simply end, and the insured will have to purchase a new policy if he or she still need life insurance protection. (The new premium amount will be based on the insured’s then-current age and health condition).
In other instances, a plan will allow the insured to convert the plan over to a permanent form of protection. And in some instances, the insured will not have to prove evidence of insurability. A conversion option can provide the insured with coverage for life, provided that the premium is paid.
You can also include a return of premium option, should the insured outlive the length of the coverage, they can receive back the premiums that were paid into the policy. This can allow the insured to have “free” life coverage.
There are several factors to consider when purchasing a level term life insurance policy. For instance, how much protection is needed, and for how long?
Because there are several parameters that come with obtaining the right policy, it can be easier to narrow down the best options for coverage – and premium cost – by working with an independent life agent like us. Doing so can also save a great deal of time.
At Insurance Geek, we’ve done all the “homework” for you. We are associated with more than 30 top-rated life insurance companies so that we can provide you with various coverage options, based on your specific needs and budget.
If you’re ready to lock in a set amount of protection – and to provide your loved ones with peace of mind – Start a quote today to get the process started.
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