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Level Life Insurance

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Level life Insurance is a form of Term Life Insurance where the amount paid out in the event of the death of the insured person does not vary. This means the dependants of a policy holder who passes away in the first year of a Level life Insurance policy receive the same amount as those of one who dies in the final year of a policy.

Advantages of Level life Insurance

The coverage begins at the first monthly payment.

It offers security at a lower premium than other policies such as Whole Life Insurance.

Level life Insurance is one of the cheapest forms of Life Insurance.

As with all Term Life Insurance, the period of coverage may not need to be a rounded up number of years, such as 10, 20, or even 50 years. Some insurance companies are more flexible than others on this issue, but a policy designed to cover the seven remaining years during which the policy holder’s children are attending school need not necessarily be extended to a ten year policy.

How Level life Insurance Premiums are Calculated

Level Life Insurance Premiums are calculated in the same manner as ordinary Term Insurance monthly payments. The insurance provider takes into account all the factors which may include some of the following, and may request proof of health, such as a medical examination which is usually paid for by the insurance company.

  • Age and sex of the policy holder. Public death statistics are used to calculate the likelihood of a policy holder dying within the term covered by the insurance.

  • Health and any history of illnesses. Illness of a chronic nature such as heart disease will increase the chance of the policy holder dying during the time they are insured and consequently will necessitate higher premiums.

  • Time the policy will cover. A shorter period of time will incur a lower premium while a longer policy will usually mean higher monthly payments.

  • Amount covered by the policy, i.e. the lump sum paid to the beneficiary on the policy holder’s death. A larger lump sum will cost the insured more, while a lesser amount will result in a cheaper payment.

More Factors To Consider About Level life Insurance

  • After the term of the policy has expired the policy holder will need to arrange further insurance to ensure coverage.

  • Level life Insurance policies are often recommended by financial advisors as the most cost effective way to provide cover until the pension of the policy holder becomes available for dependants.

  • The length of the policy must be sufficient to provide realistic coverage for dependants.

  • Level life Insurance may be used to provide cover for expenses until a future event, such as the maturity of savings accounts, occurs, to provide a safety net for dependants.

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