Level Term Assurance Information
Level term assurance is a type of insurance that pays out a cash sum if you are to suddenly die and the premiums paid are arranged when you start the policy as well as the sum insured.
You also need to arrange with the insurance company the length of term you would like the policy for. If you do not die during the term arranged at the start then no funds will be released and you will need to take out a new policy.
WPP Financial Services, Rochester, Medway, Kent, could help with this.
Quite often Level Term Assurance is used for a set amount of money to be used to cover an interest-only mortgage or to pay out a lump sum for you or your family. Level term life insurance will give a payout that is a set sum agreed at the application stage and will be passed on to your dependents to financially support them. They may need this money for mortgage repayments, household bills, expenses, loans, and debts.
Life Term Assurance Cover
Level Term Assurance can also be ‘joint life’ which covers both you can your partner equally . A partner may be a spouse, family member or business partner For a joint policy only one lump sum is paid out during the policy term. After the second person’s life will no longer be insured. Quite often taking out a joint life insurance policy is cheaper than taking out two single life insurance policies.You must ensure that you give accurate medical and personal information when you originally complete the application for life insurance as this can void any future claim if you need to make one. When the policy gets to the end of the agreed term you can not apply for any pay out so usually you will need to arrange a new one.
A level term life insurance policy is always level and this means that the pay out will always be the same amount of money. Also the premiums always remain the same. The premiums paid won’t even increase with inflation nor will the sum insured.
If you don’t pass away during the term, your level term life insurance simply lapses and you’ll need to take out a new policy if you want further life insurance. The premium is the same for a given period of years with the most common terms are 10, 15, 20, and 30 years. The longer the period of time during which the premium remains level, the higher the premium amount tends to be because older lives are more expensive to insure years. Most level term assurances have a renewal option if the insured period needs to be extended. Some also include an option to convert the term life policy to a Whole of Life policy.
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When you initially apply for the policy you will need to decide how much you want the payout to be (called the sum insured) and how long you want the cover to last for (the term). The younger you take out level term insurance, the cheaper the set premiums tend to be. However lifestyle, medical history, and occupation also have an effect.
It is quite common to take out level term assurance to be able to pay off a mortgage with a lump sum should you pass away. It is different to over types of insurance as the payout remains constant regardless of the length of term left on your mortgage. This would mean that your dependents would have the excess money once the mortgage is paid off to cover other costs.
If you choose a joint level term life insurance policy then the policy will pay out the same amount if one of you passes away during the policy term, but the policy provider will only pay out once.
This means that the surviving partner won’t then have any life insurance cover and they’ll need to think about taking out their own life insurance policy.
Reviewing Level Term Assurance
It is important to regularly review life insurance as circumstances can change such as the size of your mortgage if you buy a new property or an increase in the number of dependents.
To reduce the cost of level term insurance you can reduce the amount of cover you require, consider a less risky occupation, review your lifestyle (especially if you are a smoker) and take out a level term insurance policy as young as possible. Also consider a variety of insurers. WPP Financial Services can help you with this.
A disadvantage of level term life assurance is that the original set sum at the start of the policy may be excessive as you get to the end of the policy. This is likely to be because the debt you were originally covering has decreased.