How it works
Level term life insurance is a type of term life policy which protects you for a set period of time (e.g 25 years). When you die your insurer issues a fixed lump sum payment to your loved ones, helping them during this difficult time.
As with any type of life insurance, once you take out cover you start making monthly premium payments to your insurance provider. If you stop paying these monthly payments at any point during the policy, your insurer may end your cover early.
In this case, you will be unable to claim any compensation for premiums paid up until this point. Not only that, you will need to take out another policy if you still require cover.
What is the difference between level term and decreasing term?
Term life insurance has three levels of cover - level term, decreasing term and increasing term cover. Compared to level term, these types of protection work in distinct ways…
Decreasing term life insurance is designed to cover large payments that your family would otherwise struggle to pay off alone (like a mortgage). With level term insurance the pay-out remains fixed throughout the policy. However, with decreasing term, the pay-out reduces over time as you make repayments on outstanding balance (usually by a set percentage every year).
The policy may also pay out in the event you are diagnosed with a terminal illness, with a life expectancy of 12 months. However, this depends on the terms and conditions of your policy as well as the insurer.
Increasing term cover is designed to help shield the eventual pay-out from the effects of inflation. To ensure this happens, the pay-out value of the policy increases over time. Although the pay-out value is secured, your premiums may also increase, adding extra costs later down the line.
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What happens if you outlive the policy term?
One of the downsides to having a term life insurance policy, is that it doesn’t provide permanent protection. Should you survive the policy term (which is never a bad thing!) your policy expires, in which case you will no longer be covered should you die at any stage after. Furthermore, you won;t be able to claim a return for any of the premiums you paid into the policy.
If you’re looking for a permanent solution for cover, you should consider whole life insurance. Like a level term policy, it pays out a fixed amount when you die, however you are covered for the rest of your life.
Despite this, premiums for whole life insurance tend to be more expensive than term life policies. In this case, you may want to stick with a policy like level term life insurance if you’re looking to keep costs down.
Where can I buy level term life cover?
No matter the type of cover, life insurance offers peace of mind for you and your loved ones. So why not take out cover today and give your family the protection they deserve?
At Cavendish Online we provide a number of ways to find the best and most affordable solution for life insurance cover. Our team is on hand to help you find a policy that suits your circumstances, with no hidden fees or sales pitches.
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