What Is Level Term Life Insurance & How It Works

Oct 17, 2019 (0) comment

level term life insurance

Wouldn't it be horrible to check your email or (snail mail) and find a notice that your monthly life insurance premiums have increased or that your coverage has decreased?

Well, guess what:

If you purchase the wrong type of policy, this can happen to you, but there is a way to avoid this, and that is a level term life insurance policy.

Today, I am going to explain to you the definition of level premium term life, why it's important to have and how you can get life insurance quotes for a level term policy from a financially strong life insurance company.


What Is Level Term Life Insurance?

“In Plain English,” level term life is a term insurance policy that guarantees the premiums will stay the same for a specific term length.  

On average, these terms are 2, 5, 10, 15, 20 and 30 years.

This means that no matter what your premiums ​are when you get approved for your policy, it will stay the same until the end of the term.

It also doesn't matter if your policy requires an exam or if you are looking at life insurance no medical exam quotes, both of these policies can be level term.

If we keep in mind that our rates never change for the life of the policy, then it starts to make sense why the longer level term you choose, the higher the premiums.  

So:

All things being the same, a 30 Year level term policy will always cost more than a 5 year level term policy.

A majority of level life insurance plans, also known as traditional life insurance, policies include the option to renew your policy.

At this renewal your rates are subject to change and usually people will only renew the policy if they can’t medically be approved for a new policy.

Level Premium Term Life Insurance Policies

Unlike whole life insurance, which is considered a type of permanent life insurance, level term policies will eventually come to an end at a specific amount of time based on the policy you purchase. 

These policies have also been called fixed rate term life insurance since your rates are considered to be “Fixed” and non moving for the entirety of the policy.

Some additional things to note about level premium term life insurance policies are:

  • Your coverage amount will never change for the life of the policy
  • As Long as the policy is in-force the premiums stay the same
  • It is the most affordable type of life insurance coverage
  • It expires based on the term you choose, in either 5, 10, 15, 20 or 30 years.

Remember, your premiums will not fluctuate, they won’t go up or down no matter what happens to your health while you own the coverage.

This is always the best option for anyone who is on a fixed budget and can’t have their monthly expenses start to suddenly increase.

When you are trying to choose the right life insurance policy it is essential to know all of the details.

Why You Need A Level Life Insurance Policy?

The main reason to purchase a level term life policy is because they are the most affordable and they allow you to save money over the life of your policy. 

You will know exactly how long the coverage you have will last, and you will also know what you exact cost will be month to month.

There are other product types that aren’t level like a graded death benefit policy or and mortgage protection insurance policy.

The above policies both have limitations when it comes to being level.

A Graded death benefit policy will have a level premium, but not a level death benefit for the first 2 to 3 years.

During the first few years, your coverage amount (death benefit) is only the premiums you have paid into the policy + a few percentage points.

This means you must live for the specified period before your benefits will “Grade Up” to the full benefit amount.

Mortgage protection insurance, which is also called decreasing term life insurance policies work in the exact opposite way as a level term.

Therefore the longer you have a decreasing term policy, the lower the coverage will be and the lower the premiums will go.

Eventually you won’t have any coverage at all.  

Decreasing term policies are sort of dated and most companies are starting to not offer them anymore.

Based on all of the options, your best bet is going to be a level term life policy.

​Frequently Asked Questions

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

The primary differences between a level term policy and a decreasing term life insurance policy is that the death benefit of a level term policy will never change.

​Death benefits of a decreasing term policy will decrease over the life of the policy down to a specific amount.  These policies are usually used for mortgage protection insurance.

How does a term life insurance policy work?

The way a term life insurance policy works is that you are given a set amount of coverage, for a specific monthly premium, over a set period of time.

Should I get level term or decreasing life insurance?

In my professional opinion, in any case of purchasing life insurance you should always get a level term life plan.  There isn't any real reason to purchase a policy that will decrease in its benefits over time.

How does decreasing term insurance work?

The way decreasing term insurance works is that your death benefits will start out at a high amount, let's say $500,000 and then over the term, let's say 20 years; it will decrease down to maybe a $50,000 death benefit, the monthly premiums will decrease as well.

Should I get decreasing life insurance?

At Simply Insurance we would not recommend purchasing a decreasing life insurance policy for any reason.

Does Term Life Insurance decrease in value?

Term life insurance itself does Not decrease in value; however, there are some policies that have a decreasing feature attached to them, always ask if your policy is level or not when dealing with life insurance.

What is annual renewable term life insurance?

An annual renewable term life insurance policy is a life insurance policy that will renew once per year with a new rate.  This product is also known as short term life insurance.

How To Get Term Life Insurance Quotes

The fastest way to get level term life insurance quotes is to use our quote tool on the right side of your screen or the button above.

The fastest way to get the level term life insurance quotes is to use our quote tool below or by visiting our term life insurance quotes page.

We don’t need any personal information to run you a quote, this way you can decide if you want to purchase term life insurance not.

The other option is to reach out to an agent or search other quoting sites for a level insurance policy.   

But be warned that getting quotes on multiple sites can get you called over 100 times.  

I wrote a guide about how to get ​term life insurance quotes without personal information to help you avoid just that.

Either way, choosing a level term insurance policy will help keep your family covered, decrease costs over time and help you avoid random expenses.

Thanks For Reading My Post... Before You Go!

What did you think of my post?  Did I miss anything?

Sa El is the Co-Founder & CEO of Simply Insurance. He is a Licensed Life and Health Insurance Agent with over 11 years of experience in the industry. He is an Entrepreneur, Insurance Educator and Field Underwriter. Sa is on a Journey to get 1 Million Families insured.

All posts by Mark Mathon

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