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Level term life insurance removes one of the principal drawbacks to term life insurance. Term life insurance is generally more affordable than whole life insurance and this affordability provides the reason that many people choose this form of coverage. One of the inherent drawbacks to many of these policies, however, is an adjustable rate.
Term life insurance is purchased for a certain duration, the “term”, for which it provides coverage. After this term is over, the policy expires and the death benefit will no longer be paid to the beneficiaries. The premiums paid, in essence, are entirely lost. Add to this that, for reasons that are at the discretion of the provider, those premiums may increase, and you have a situation where those premiums may get very expensive.
Level term life insurance guarantees a certain premium for the duration of the term, regardless of changes in health or other conditions that may serve as a reason for the provider to increase premiums on regular term life policies. These provide another element of security in that one can set a budget more accurately and need not worry that a sudden health issue will cause yet another bill to increase in cost. In cases where those health issues affect earning power, this is particularly valuable.
Level term life insurance will often carry with it other benefits, as well. Some companies will allow the insured to convert their policy to a cash value policy at the end of the term or to renew their term without having to undergo a medical examination to prove insurability. Benefits such as these make these policies very attractive to many individuals, especially those who haven’t the financial resources to purchase whole life insurance as their first type of life insurance policy.
Most companies offer some type of level term life insurance policy among their products. Sometimes the premium will be a bit higher than it would with a standard term life insurance policy but, remember, the regular policies have no guarantee of maintaining that initially low premium. With a level term policy, you have the promise that your premium will remain constant throughout the duration of the term.
To qualify for your first policy, you may have to get a physical examination from a doctor. The premium charged for your level term life insurance policy will also vary according to your health habits. Tobacco users and heavy drinkers will pay higher premiums, as will those with particularly dangerous occupations. These policies really do add more to the peace of mind already offered by carrying a life insurance policy, however, and the stability of the premiums makes the whole affair much less complicated.