Level term life insurance

Level term life insurance is one of a couple of options you have when it comes to protecting your family. Find out how it works.

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There are different types of life insurance to choose from but one option is level term life insurance. Read our guide to find out what level term life insurance is and how much it might cost you.

What is level term life insurance and how does it work?

Level term life insurance is a policy that will result in a fixed lump sum payout at any point during the policy term after the death of the policyholder. Even if, for example, the policyholder dies at the start of the policy term, the payout will be the same as if the policyholder were to die just before the end of the policy term.

As with the lump sum payout, the premiums for a level term life insurance policy are also generally fixed, so the regular payments would not increase in the future in line with inflation.

If the policyholder survives after the policy term ends, then a new life insurance policy would need to be taken out as no lump sum payout would be made on the original policy.

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How much cover do I need?

The amount of cover you need will very much depend on how much you would like the payout to be and how long you want the policy term to last for.

Choosing an extremely high lump sum payout over a long policy duration could mean your premiums will be higher. But selecting a lower lump sum payout to reduce your premiums could mean your family are left financially unstable after you’ve gone.

Do your research and look at any big outgoings that you currently have such as a mortgage or car loan. Then, work out what your family would need in order to clear the mortgage debt, any other loans and also live comfortably.

What are the benefits of a level term policy?

A key benefit to a level term life insurance policy is that in the event of your death, your family could receive a fixed lump sum in order to pay for a range of outstanding financial obligations. Throughout the policy duration, your premiums would also remain exactly the same.

What are the disadvantages of a level policy?

While you can see the benefits to a level term life insurance policy above, you should also be aware that the premiums for this type of policy are likely to be much higher in comparison to other types of life insurance policies.

How much does level term life insurance cost?

The cost of your level term life insurance policy will vary depending on the level of cover you choose as well as the insurer willing to offer you the cover. Your premiums will also be calculated based on a number of personal factors such as your age, occupation, medical history and current health, and lifestyle.

It’s important to understand that your premiums are likely to be cheaper if you are young and healthy. Meanwhile, lifestyle choices such as smoking or drinking alcohol regularly could mean that your premiums are higher.

The younger you take out a level term life insurance policy, the lower the premiums are likely to be. On the other hand, if you decide to take out a level term life insurance policy later in life, prepare to pay higher premiums.

How to save on level term life insurance

If you want to offer your family financial security when you’re gone but also want to save on your level term life insurance, you might want to consider ways to lower your premiums.

  • Avoid insuring yourself for more than you need. Your premiums will be higher if you choose a lump sum that is also higher.
  • Try to secure a life insurance policy when you’re young and healthy, as your premiums will be much lower than if you decide to take a policy out when you’re much older.
  • Avoid smoking and any other vices that will likely affect your health.
  • Before taking out a life insurance policy, check that you don’t already have one, as sometimes, employers can offer life insurance as part of its benefits package.
  • Do your research, shop around and compare deals.

Finding the best level term life insurance

Finding the right level term life insurance will very much depend on your own circumstances. It’s worth doing your research and finding out which conditions are listed as a critical illness. The more comprehensive the list of critical illnesses, the more the premiums are likely to be for the cover. The final decision rests on your shoulders to determine which critical illness cover is right for you.

Compare life insurance providers

Data indicated here is updated regularly
Name Product Cover options Age range at application Cover amount Pays out % claims paid Offer Link
Aegon
Aegon
Level term cover, decreasing term cover, increasing term cover, whole of life cover and family income benefit.
18-84
£1million
If a policyholder dies or is diagnosed with a terminal illness, sum will be paid.
96%
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AIG
AIG
Level term cover, decreasing term cover, increasing term cover, whole of life cover and family income benefit.
18-84
£1million
If a policyholder dies or is diagnosed with a terminal illness, sum will be paid.
96%
£75 Amazon giftcard. Terms and conditions apply.
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Aviva
Level term cover and decreasing term cover.
18-89
£5million
If you die or get a terminal illness and aren’t expected to live longer than 12 months.
98.9%
£75 Amazon giftcard. Terms and conditions apply.
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HSBC
Level term cover and decreasing term cover.
17-69
£250,000
If policyholder dies, the sum decided will be paid out.
100%
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LV=
LV=
Level term cover and decreasing term cover.
17-79
£10million
If a policyholder dies or is diagnosed with a terminal illness, sum will be paid
99%
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Royal London
Level term cover and decreasing term cover.
18-70
£500,000
If a policyholder dies or is diagnosed with a terminal illness, sum will be paid.
99.7%
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Scottish Widows
Level term cover and decreasing term cover.
18-64
£2million
If a policyholder dies or is diagnosed with a terminal illness, sum will be paid.
99%
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Vitality
Level term cover, indexed term cover, decreasing term cover and family income term cover.
16-74
£20million
If a policyholder dies or is diagnosed with a terminal illness, critial illness could lead to an earlier payment.
99.8%
£100 Amazon giftcard. Terms and conditions apply.
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Zurich
Level term cover.
16 - 83
£40million
If a policyholder dies or is diagnosed with a terminal illness, sum will be paid.
99%
£100 Amazon giftcard. Terms and conditions apply.
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Legal & General
Level term cover.
18-77
£3million
If a policyholder dies or is diagnosed with a terminal illness, sum will be paid.
97%
Up to £150 amazon.co.uk or M&S gift card with life cover.
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Canada Life
Canada Life
Level term cover, increasing term cover and decreasing term cover.
18-80
£1million
If you die or get a terminal illness and aren’t expected to live longer than 12 months.
100%
The Canada Life app, access to discounts and benefits.
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