A term life insurance policy is one of the most popular forms of life insurance available today, thanks to the low-cost aspect of these plans. But did you know that there are several sub-types of term life insurance that you can choose from?
One of the most commonly available forms of term insurance is level term life insurance. What is level term insurance? Why should you know about it? Before we dive into the answers to these questions, let’s take a quick look at what life insurance is and why is it important.
Importance of Life Insurance
Before you buy or even consider buying any term life insurance policy, it is necessary for you to understand what life insurance is. To put it simply, life insurance is a contract between the insurance provider and the policyholder. As a part of this contract, the policyholder is required to pay premiums for the sum assured they desire. On the other hand, the insurance provider will offer a death benefit as a primary policy benefit. Depending on the type of policy chosen, there may be several other features and benefits that the insurance company may offer.
Thus, a life insurance policy is a way to secure the future of your loved ones and offer them financial support to enable them to face the uncertainties of life. It is a way for you to ensure that whether you are there or not, your loved ones do not have to give up on their dreams and have the financial means to look after themselves.
A life insurance calculator can help you get a better idea of how much premium will you be required to pay for the sum assured you desired.
What is Term Insurance?
Term life insurance is known to be one of the simplest forms of life insurance available today. While most other life insurance policies offer a host of other benefits, term insurance plans tend to keep it relatively simpler.
While there are not a lot more additional benefits in the case of term life insurance, the plans can be customised with additional benefits and riders as offered by the insurance provider.
Another reason why term life insurance plans are popular is that they tend to be less expensive. Since they are simpler in design, they are offered at a lower cost, making them financially accessible to a wide range of people.
What is Level Term Life Insurance?
Level term life plans are a variant of term life insurance. They are one of the most basic types of plans available in the market today. So, if you are looking for a simple, no-frills life insurance plan to offer you a life cover at a relatively lower cost, level term plans may be the right option for you.
Some insurance providers offer these plans for a duration of as low as five years. Commonly, these plans can be taken for a term duration of anywhere between 10 years to 40 years. For most of these plans, the maximum age of entry is 60-65 years, whereas the maximum maturity age limit is 70-75 years. However, most people may prefer to buy these plans at a younger age since these plans tend to get more expensive as you grow older.
But why are these plans referred to as “level” term plans? The term “level” in the name may be a hint toward the fact that these plans offer a level death benefit throughout the term. What this means is that whether you seek the death benefit in the fifth year of the plan or the ninth year, the sum assured will remain the same, i.e., the death benefit will be level.
Thus, one of the key benefits of buying a level term insurance plan is that the death benefit your nominee will receive will remain the same throughout the duration of the policy. This makes it an ideal policy if you want to relieve your worries about your family’s financial future and offer them security.
Another aspect to consider about these plans is that the premiums you pay will remain the same throughout the term duration, i.e., you pay the same amount every cycle. This also makes this plan easier to fit into your financial planning, since you will be able to plan for your premium payments in advance.
Once you understand what level term insurance plans are, you can easily compare them with other available options to understand which one suits you best. It is advisable to buy any life insurance policy after understanding the policy and its features well. Level term insurance plans are relatively simpler to understand and may suit your needs if you are looking for a basic life insurance plan.