Understanding Level Term Insurance

In terms of death benefits, Term Insurance can be considered as the purest type of life insurance. It can be further subdivided to better meet the individual buyer's needs, and Level Term Insurance is one such plan. It functions similarly to Term Insurance, but is commonly known as a level benefit policy because the policy's death benefit is guaranteed to be a set amount. Read ahead to understand more about this type of coverage.

Level Term Insurance is a type of Term Insurance policy where if the insured person were to pass away unexpectedly during the policy's effective period, the beneficiary would receive the death benefit. 

In a Level Premium Term Plan premiums remain constant for the duration of the policy. Here, the premium and the death benefit are guaranteed never to change. Depending on the policyholder's needs, the duration of a Level Term Insurance coverage ranges from ten to thirty years.

Besides the variations mentioned above, Level Term Insurance policies can be purchased in terms of 20, 30, or even fewer than five years depending upon the insurer.

Here are some prominent features of Level Term Policy. 

In contrast to other types of term insurance, the premium for Level Term Plans remains constant throughout the policy. Factors, including age, annual income, medical health, and other requirements and liabilities, are considered when insurance companies determine premiums.

A Level Term Insurance Plan functions similarly to any other insurance policy. The following guidelines should guide you through the process.

Consider Aryan, who, for example, purchased a Rs. 20 Lakhs Sum Assured Level Term Insurance Policy. He decides on a 30-year coverage and pays the monthly premiums that go along with it. Given this, Aryan's mother, as the primary beneficiary, must inform the insurance company in case of her son's untimely demise and file a claim. The insurance company must pay Rs. 20 Lakhs to Aryan's mother after the claim has been verified.

The disadvantages of purchasing level-term insurance can be substantial. 

Here are the top reasons to choose a Level Term Insurance policy. 

Level Term Insurance could be useful for somebody who is a financial supporter of others. Before investing in a costly and potentially risky Permanent Life Insurance Policy, policy-seekers might examine affordable and flexible term options.

Parents with young children or those planning to start a family may consider purchasing Level Term Life Insurance. They might get enough insurance to cover future child care expenses, college tuition, and living expenses and replace lost income during their kids' formative years.

Follow these tips to get an apt Level Term Insurance plan. 

Coverage under a Level Term Life Insurance policy may end when the term ends or be extended at a more expensive premium. When you renew your coverage, you won't have to undergo another physical and health questionnaire to determine your mortality risk.

At the end of the term, you can change your coverage to a permanent one. There would still be a premium increase, but as long as you continued making payments, your policy wouldn't expire.

The insurance company may restore the premiums paid after the initial term if the policyholder lives longer than the policy's term and the rider providing for such a return of premium was purchased. The cost of Level Term Life Insurance can rise if you add a Return of Premium rider.

Unless the policyholder renews or converts their policy, their beneficiaries will not get a death benefit if they outlast the initial term for Level Term Life Insurance.

Disclaimer: The content on this page is generic and shared only for informational and explanatory purposes. It is based on industry experience and several secondary sources on the internet, and is subject to changes.