Level term life insurance

Choosing the right life insurance  can be tricky – after all, it’s not one of those subjects that makes for great bedtime reading or light-hearted conversation. But it is one of those subjects that needs addressing so you have a plan in place to take care of your loved ones if the worst should happen and you pass away. So when you do come to choose life insurance – you’ll find that level term life insurance is just one option – here’s what it’s all about.


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What is level term life insurance?

It’s a type of life insurance that pays out an agreed lump sum if you pass away within the policy period (known as the policy ‘term’). The policy term is agreed when you take out the policy, so as long as you keep up to date with your payments your beneficiaries will receive a guaranteed amount of money if you pass away within the policy term e.g. 20 years.

If you don’t pass away within the policy term, then unfortunately you and your family won’t receive a payout and you won’t get any of your premiums back, as with most insurance products. You’ll have to take out a new policy if you want the security of life insurance to continue.

Who is level term life insurance suitable for?

Level term insurance is useful if you want to ensure your loved ones receive a fixed lump sum of money so they are supported if you were to pass away. That’s because the amount is agreed up front and is fixed, it can be used to pay off part or all of a mortgage, school or university fees, personal loans or even funeral costs.


What are the benefits of level term life insurance?

Like with any form of life insurance – it gives peace of mind, not just for you but also for your family. Taking out life insurance could ensure that your family keep the home they’ve grown up in, or that your children go to university, even if you’re not around to help with the expense. It can make sure they’re protected from any financial burdens that might be passed onto them and enjoy their life without worrying about money.


Are there any alternatives?

When it comes to choosing types of life insurance, you’ll need to think about what the money will actually be used for because this could impact the type of policy you take out. Level term insurance gives you the security of a fixed sum of money and as a result of, premiums will usually be a bit higher compared to a decreasing term policy.

Decreasing term life insurance is similar to level term policies in that you choose the length of time the policy runs for. However with a decreasing term policy, the amount of money paid out gets smaller as the policy matures. It’s designed for people whose financial commitments will reduce over time, for example, if you’re repaying a mortgage, the amount of money needed to cover the mortgage will naturally decrease as you pay it off. As a result with decreasing term policies, the premiums tend to be lower to reflect that the overall pay out decreases over time.

Another option is a whole of life policy – these tend to have higher premiums than decreasing or level term payments. That’s because (as the name implies) the policy is guaranteed to pay out whenever you die – so long as you continue to keep up with your policy premiums. For more information on whole of life policies, call our advisors at Life Search on 0800 072 1141 (Mon-Fri 8am - 8pm Sat 9am - 2.30pm). They're really friendly and just at the end of the phone to help you figure out just what you need.

What’s right for me?

This is where you might need a pen and paper, because what’s right for you will depend on your own unique circumstances. But we’ve developed a handy cover calculator to help you figure out how much cover you need.

You’ll need to bear in mind just what it is that you need though. Trying to take out too much cover could mean that the premiums might be higher than you’re prepared to pay and underestimating means your family might not be left with enough money to support them in the future so think carefully about the amount you need.

So where do I start?

That’s where we come in. use our life insurance comparison service to compare your options. We’ll ask you a few straightforward questions – things like, how old you are, whether you smoke and how much you want to be insured for – all of this will help determine the cost of your premium.

Or you can call us on 0800 072 1141 (Mon-Fri 8am - 8pm Sat 9am - 2.30pm) and one of our advisors at LifeSearch will be able to guide you.

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