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Are you considering life insurance, but don’t know where to start? Term life insurance should be your first option – it’s cost-effective, flexible, and helps protect your family’s finances.
Level term life insurance can offer financial protection for your loved ones and peace of mind when faced with unexpected tragedy. We’ll explain the advantages of level term life cover, and how it can help secure your family’s future.
What is level term life insurance?
Level term life insurance covers you for a set period of time, usually 10, 20, or 30 years. During this period, the death benefit remains the same – it doesn’t increase or decrease. When you die, the policy pays a fixed lump sum, helping your family with various costs.
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It’s typically the most affordable type of life insurance, as premiums remain the same throughout the policy term. The policy pays out so long as you pass away during the term. Should you survive the policy term, your cover will expire and you won’t be entitled to any money.
Benefits of Level Term Life Insurance
Level term cover offers plenty of advantages, making it an attractive option for financial protection. Here are some key benefits:
- Affordable premiums: Level term is typically the most affordable type of cover. Your premiums also remain the same throughout the policy term.
- Flexible coverage: You can choose the length of the policy and the amount of coverage you need.
- Lump sum payment: When you die, your beneficiaries will receive a lump sum payment. This can help with living costs, loans/debts, and even provide an inheritance for your children.
- Offers peace of mind: Having cover provides your loved ones with peace of mind. Knowing they’ll be financially secure in the event of your death gives them a sense of security.
- Tax-free death benefit: The payout amount from a level term life policy is typically tax-free.
- Financial protection: Level term cover provides financial security for your family after your death. It can help maintain their lifestyle and cover unexpected expenses.
How much cover will I need?
The amount of cover needed depends on your circumstances. Generally, it’s advised to choose a pay out amount at least 10 times your annual income. This can ensure your family has money to cover any debts or expenses after your death.
When deciding how much coverage you need, it is important to consider your current financial situation. For example, if you have a mortgage or other debts, you may need more cover than someone who does not.
When calculating how much coverage you need, consider other sources of income, such as investments or savings. This will help ensure your family is financially secure in your absence.
Alternative options for cover
If you are looking for an alternative to level term insurance, there are several other options available:
- Whole life insurance – Provides coverage for your entire life, and premiums remain the same throughout the policy. Whole life policies typically have higher premiums than term life insurance policies, but they also offer more benefits.
- Decreasing term life insurance – Similar to level term life insurance, except the death benefit reduces over time. This type of policy is typically used to cover a debt, such as a mortgage.
- Increasing term life insurance – Provides cover for a set period of time, but the death benefit increases over time. This type of policy typically keeps up with inflation, ensuring that your beneficiaries have enough money to cover various costs.
- Joint life insurance – Provides cover for two people, usually a married couple. The death benefit is paid out when either person passes away.
- Family income benefit – Issues a regular income to your family in the event of your death, helping them maintain their lifestyle.
- Critical illness cover – Pays a lump sum if you’re diagnosed with a serious illness, like cancer or heart disease. This can help cover medical expenses and provide financial security for your family.
It’s important to remember that life insurance is not a one-size-fits-all solution. Remember to consider your circumstances when deciding which type of cover is best for you. It is also important to review your policy regularly, as your needs may change over time.
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