As you’re shopping for life insurance coverage, there are several types of policies for you to review, including level term life insurance. This is a popular type of term life insurance where the death benefit remains the same (level) throughout the entire duration of the policy. This means that if the insured passes away while the policy is active, the designated beneficiaries will receive the entire death benefit amount.
Level term life insurance is often chosen to provide financial protection during specific periods of life when individuals may have significant financial responsibilities, such as mortgage payments, education expenses, or to replace lost income. The premiums for level term life insurance are typically fixed and remain the same throughout the policy term. Most term life insurance policies are considered “level term.” Keep reading to learn more about the key features of level term life insurance and the considerations you’ll want to keep in mind when purchasing this type of policy.
Key Features of Level Term Life Insurance
Level term life insurance offers several key features that make it a popular choice for individuals looking for straightforward and predictable coverage. Here’s an overview of these features to help you make informed decisions when considering this type of insurance:
Fixed Death Benefit: Level term life insurance provides a fixed death benefit amount that remains the same throughout the entire duration of the policy. This means that if the insured passes away during the term, the beneficiaries will receive the full predetermined death benefit.
Fixed Premiums: The premiums for level term life insurance are typically fixed and remain unchanged throughout the policy term. This allows for easier budgeting as the policyholder knows exactly how much they need to pay each month or year.
Specific Term Length: Level term life insurance policies have a specific term length, such as 10, 20, or 30 years. The policyholder can choose the term length based on their needs and financial obligations.
No Cash Value: Unlike some other types of life insurance policies, level term life insurance does not accumulate cash value over time. The policy is solely focused on providing a death benefit to the beneficiaries in the event of the insured's death during the term.
Convertibility Options: Many level term life insurance policies offer the option to convert the policy into a permanent life insurance policy, such as whole life or universal life insurance. This allows the policyholder to extend their coverage beyond the initial term without the need for a medical examination.
Considerations for Purchasing Level Term Life Insurance
While level term life insurance is appealing due to its affordability and consistency, there are other considerations to keep in mind. As with all term policies, level term life insurance will expire at the end of the term length, so you’ll need to have a plan to renew the policy or convert it to a permanent policy in order to make sure your loved ones stay protected.
You also want to make sure you choose a term length that aligns with your financial goals because as your coverage needs evolve, the term length you originally chose may not remain the best fit. A permanent life insurance policy is a good alternative to term life insurance if you’re looking for lifetime coverage, so it’s important to keep your lifestyle and responsibilities in mind when choosing the policy that’s right for you.
Is a level term life insurance policy right for you? SelectQuote can help you find out.
Level term life insurance can be a great fit for many individuals, especially those who want a straightforward, affordable option before they purchase a permanent policy. If you’re wondering if this is the right type of coverage for you, SelectQuote can help. Our experienced licensed insurance agents can guide you through your options to help you streamline the life insurance shopping process. We’ll search a variety of trusted carriers on your behalf, finding you the right policy for your needs in just minutes.
