Level Term Life Insurance

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What Is Level Term Life Insurance?

Level term life insurance pays out a fixed amount (level amount) over the term of your life insurance policy should you pass away. This is in contrast to a decreasing term life insurance policy whereby the pay-out amount reduces over time.

The pay-out amount and duration of a level term life insurance policy are set by the policy holder at the start of the policy.

Below, we look at the questions that often arise when considering whether a term life insurance policy is right for you.

When Should A Level Term Life Insurance Policy Be Taken Out?

Many people will take out a level term life insurance policy as a result of a life-changing event such as having a child or buying a house with a mortgage. The older you are, the more expensive a level term insurance policy will be, so it can be cheaper to take out a policy sooner rather than later.

How Much Do Level Term Life Insurance Policies Cost?

Level term life insurance cover starts from as little as £5 per month for £100,000 worth of cover. However, to have a premium amount of just £5, you would typically need to be a non-smoker in your 20s and in good health. Premiums increase as you get older and are dependent on numerous factors including your salary, medical history, lifestyle as well as how much cover you require and the duration of the policy.

What Cover Amount Should I Choose?

How much cover you require will be unique to you and your situation. To work out what amount of cover you require, you need to consider your circumstances and decide how much money your dependents may need should the worst happen. Typical uses (and therefore areas you may also like to consider) for a level term life insurance pay-out include:

  • Mortgage – could your family afford to keep up with mortgage payments if you were no longer around? It’s important to note that this isn’t just a consideration for the main bread winner in the house, it equally applies to a stay at home Mum or Dad – in the event that they died, who will look after the children whilst the other parent works for example? As a result, you may wish for your policy to cover your outstanding mortgage.
  • Bills & Living Costs – if you died during the term of level term life insurance, it is clearly going to a distressing time for your loved ones. You may decide to ensure that the cost of running a home, paying bills and other living expenses should also be taken care of.
  • Funeral Costs – funerals are expensive and you may want to take the cost of your funeral into consideration when working out a suitable cover amount, alleviating that expense for your loved ones.

Ultimately, the level of cover you require will be a choice personal to you and your spouse/partner. Bear in mind that your monthly premiums will increase inline with the amount of cover that you choose.

What is the difference between level term and decreasing term life insurance?

As the name suggests the cover amount of a decreasing term life insurance reduces over the term of the policy. This type of life insurance is often used to pay off the outstanding balance on a repayment mortgage. In comparison, a level term life insurance pays out the same amount regardless of when a claim is made. To find out more about the various types of life insurance and life assurance policies, visit our life insurance page.

How do I find the best deal on level term life insurance?

The cheapest deal is not always the most suitable when it comes to life insurance. In light of that, we make it easy to compare level term life insurance quotes, by working with a panel of leading life insurance providers and brokers who will provide you with tailored quotes and offer expert advice for free.

If you are interested in seeing how much cover you get, why not compare level term life insurance quotes today?