Level Term Life Insurance

Level term life insurance is a type of life insurance policy which guarantees a lump sum payout if the policyholder dies during a specified time period ("the term"). The level part of the phrase, level term life insurance, reflects the fact that protection is provided by the life insurer in return for a fixed monthly premium.

A level term life insurance policy does not have a cash-in value at any time. As a result, this provides a straight forward way of buying a cheap and simple form of life insurance protection.

Level term life insurance and critical illness

A level term life insurance policy will usually include cover for critical illnesses from which you are unlikely to survive for more than 12 months. The exact illness will need to be specified in the level term life insurance policy documents issued by the insurer. The critical illness option within a level term life insurance policy should be available in most cases although there may be an additional cost.

The diagnosis of the illness must take place during the term of the policy and the amount payable is usually the same as that which would have been paid had you died. However, once this is paid out, the policy will terminate and no further payment will be made upon any resulting or future death. This payment from your level term life insurance policy gives you the financial benefit prior to your death and leaves you with the choice of setting up a financial package for any dependents or simply enjoying the rest of your life as best you can.

Deferring level term life insurance payments

For a small additional monthly premium, your level term life insurance provider may cover your monthly premiums if you're unable to work because of an illness or accident. This may be subject to a specified deferring period set out in your level term life insurance policy. In effect, this addition to your monthly premium acts as insurance against missed monthly payments on your level term life insurance policy as a direct result of illnesses or accidents.