What Is Level Term Life Insurance?
Level term life insurance is a type of life insurance that provides level benefits for a set amount of time. The policyholder pays a fixed premium, and the death benefit amount remains the same throughout the policy term. Here are some key things to know about level term life insurance:
| Advantages of level term life insurance | Disadvantages of level term life insurance |
|---|---|
| Provides predictable death benefit | Premiums can be more expensive than other types of life insurance |
| Helps with budgeting as premiums remain level | Does not build cash value |
| Can be cheaper in the long run as coverage and rates are based on current health | May not be the best option for those with fluctuating health conditions |
One alternative to level term insurance is annual renewable term life insurance, which renews each year with rates going up as you get older. Another alternative is decreasing term life insurance, which provides a death benefit that decreases over time. However, decreasing term life insurance is often less expensive because the payout decreases over time.
If you want to increase your coverage with level term life insurance, you may need to reapply with new forms and a new medical exam. Decreasing coverage, on the other hand, is usually easier and only requires filling out a form. Alternatively, you could ladder your term insurance policies to get the total coverage you need, which may reduce your overall premiums.
Overall, level term life insurance can be a good option for those looking for predictable and budget-friendly life insurance coverage. However, it may not be the best option for those with fluctuating health conditions or those who want a policy that builds cash value.
