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Level term life insurance

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Life insurance policies are usually classified by the type of premiums paid, and the coverage they provide. There are many policies that are structured to suit the varying needs of people, who are looking to cover their loved ones for expenses and keep them safe. Level term life insurance is one such policy which digresses from others by having a constant premium payout. Level term life insurance is normally available for specified periods of time like 10, 15, 20, or 30 years, and for the whole of the time period, the policy holder must pay a specified standard premium rate.

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Highlights of this policy

Level term life insurance policy can be both suitable for all people, because it gives them the flexibility to choose. Premium rates are completely dependent on the time period for which the insurance coverage is chosen for, and the age of the policy holder, with medical records. The premium rates for a 10 year life insurance is lesser than that of a longer time period, since the age of the policy holder advances with time. Younger policy holders get better premium rates even if the time period chosen is longer. The policy holder also gets the flexibility of extending the policy for any time period, but it always requires fresh medical exams and other involving paperwork.

Every time the policy holder extends the policy for a specified time period, the premium rates change. Level term life insurance does not need yearly renewal until the time period that the policy holder has opted for, expires. Life insurance rates for level term coverage is normally higher than other types of insurance, because the face value of the insurance does not change, even if anything were to happen to the policy holder at any point of time during the insurance is valid. The amount that the insurance company pays is the same even if the policy holder’s death occurs during the first year of the policy.

Variations

Level term insurance is also available in the annual renewal form, if the policy holder does not wish to pay high premiums right from the beginning. The clauses of this policy are the same as the level term, but with every year the policy is renewed, premium rates can be slightly higher. Because the renewal annual term is in the clause, there is no medical exam or qualifying paperwork needed for every renewal. The premium rate will be lower for the first few years, but since they are not fixed like in level term, they may end up being higher than that of the long term policy.

Additions

Critical illness policy and mortgage coverage can be added to level term insurance policy to get some extra coverage and protect the family better. Critical illness coverage can provide benefits if the policy holder is diagnosed with an illness during the term of the policy, and is not in a condition for employment. Mortgage coverage can either be added as a policy, or can just be included in the total amount that the policy holder wants to be insured of. When the face value of the mortgage is included in the total amount, the family gets the complete amount, even if the mortgage is partly paid. This will give them some leverage to use the money for personal expenses as well. But adding these policies to the level term insurance will cost additional premiums every month. Buying proper life insurance coverage is very important to give the loved ones a peace of mind, and free them from financial burden. Paying slightly higher premium rates for a better coverage is always worth it.

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