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Level term life insurance is a type of insurance that pays out a cash sum if you pass away during the course of a policy. The agreed period of your policy is called the ‘term’ and the pay-out you’ll be eligible for is agreed up-front when you take out your policy. So as long as you keep up to date with your payments, your beneficiaries will receive a guaranteed lump sum payment. If you don’t pass away within the policy term, then you and your family won’t receive a pay-out. In that case, you will have to take out a new policy if you want to have the security of life insurance.
Level term insurance is useful if you want to ensure your loved ones get a fixed lump sum of money so they’re supported if you were to pass away. This can be used to pay off part or all of a mortgage, school or university fees, personal loans and debts, or even your own funeral costs. Another benefit is that your premium will stay the same throughout the length of the policy, unless you make any changes to your policy.
Because level term insurance gives you the security of a fixed sum of money, premiums will usually be higher compared to other life insurance policies. Generally speaking, the younger you buy this type of cover the cheaper your premiums are likely to be.
Decreasing term life insurance, for example, is similar to level term policies – in that you choose the length of time the policy runs for. However with this type of policy, the amount of money paid out reduces throughout the term of a policy. 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. 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. There are other types of life cover to think about as well. For instance, you could take out a joint life insurance policy with a partner. But this will only pay out once, and it’ll be on the death of the first policyholder.
We’ve developed a simple-to-use life insurance calculator to help you figure out how much insurance you might need. The amount of cover you need will help you define which policy type is right for you. Taking out too much could mean that your premiums might be higher than you’re prepared to pay. But underestimating the cover you need means your family might not be left with enough money to support them in the future - so think carefully about the amount you’ll need to protect the ones you care about most.
The type of life insurance that’s right for you will depend on your own circumstances and needs. Our cheapest quotes may not necessarily be what works for you. But it can be really quick to compare, so why not get a life insurance quote and see if you could save?