The life cover is valid for a specified period, known as the policy term. In case something untoward happens to you during this period, your nominees will receive the death benefits guaranteed under the plan, from the insurance provider. On the other hand, in case you survive the policy term, these benefits will not be paid out.
The most common kind of Term Insurance Plan is level term life insurance. Let’s get to know all about what a level term plan is.
What is Level Term Insurance?
The sum assured under a term insurance plan is specified upfront, at the time of purchase itself. So, you know the exact amount of life cover that you have purchased. In the case of a level term insurance plan, this sum assured remains constant throughout the policy term. It does not decrease or increase as the years go by.
For example, say you decide to purchase a term insurance plan that offers a sum assured of Rs. 1 crore. And say the life cover offered by this plan is valid for a period of 30 years. So, if this is a level term policy, that means the sum assured will continue to remain Rs. 1 crore throughout the 30-year period. And in case of your demise at any point during the policy term, your nominees will receive the sum of Rs. 1 crore from your insurance provider.
Benefits of Level Term Insurance
Level term insurance policies have many benefits to offer the insured person as well as their nominees. Let’s take a closer look at the advantages of having a level term insurance plan in place.
● It gives you peace of mind
In a level term insurance plan, you know the exact amount of coverage you’re going to get. And that coverage remains unchanged over the years, throughout the policy term. This gives you a great deal of peace of mind, because you can rest assured that there is an adequate financial safety net for the future, in case of any untoward occurrence.
● It is a cost-effective way to protect your family
A level term insurance plan is affordable. This is because term plans are pure life cover that offer death benefits to the nominees of the insured person. Plus, you can get a life coverage at nominal premiums, making level term insurance policies one of the cost-effective ways to protect your family.
● It helps you with your financial plan
You know upfront what the amount of coverage is in a level term policy. This will give you a good idea of how well-protected your family is, and how much more you need to save up or invest in order to meet your goal. For example, if you wish to set up a safety net of Rs. 2 crores for your family, you can meet half of that need with a 1-crore level term plan. That leaves you with just 50% of your requirement to be planned for.
Level term Insurance vs Decreasing Term Insurance vs Increasing Term Insurance
Wondering how level term insurance is different from decreasing term insurance and Whole Life Insurance? Check out the key details below.
● Level term insurance vs. decreasing term insurance:
In a level term plan, the sum assured remains constant during the policy term. However, in a decreasing term insurance plan, the sum assured decreases over the life of a policy on a predetermined basis. The premium, however, remains constant.
● Level term insurance vs. increasing term insurance:
You know how a level term insurance plan works. An increasing term insurance plan, unlike a level cover, offers a sum assured that gradually increases during the policy term. The rate of increase as well as the amount up to which the cover can rise is predetermined by the policy’s terms and conditions.
Conclusion
Now that you know what a level term insurance plan is and how it works, you can easily make an informed decision about whether this is the right kind of life cover for your needs. There are many benefits that a level term plan offers, as you’ve seen above. By including a level term plan in your portfolio, you too can enjoy these advantages and pass the benefits on to your family and your loved ones.
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