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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