Level term life insurance is the life insurance that most people think of when they consider providing for their family's future. The insurance pays out a fixed amount as a lump sum if the insured party dies during the term of the insurance policy. Read more...>
The amount of money that is given as a payout is chosen by the customer as is the length of the term and from those choices a monthly premium is calculated. The premium will also take into account medical factors such as family health history, whether the insured is a smoker and how much alcohol they drink. Insurance companies base their business on assessing risk factors and that is how they calculate life insurance premiums.
When deciding on the value of payout it can be difficult to judge how much the family will need at some time in the future but certainly most people will take into account known costs like mortgage repayments. It is prudent to remember that inflation will raise the cost of living during the term.
The premium is usually paid as a monthly direct debit these days as forgetting to pay the premium may invalidate the cover.
Although over the term of the policy money has been paid in through premiums these level term insurance policies are not a form of saving and do not have a cash-in value. The insured cannot stop payments and ask for their money back and will not receive any money if they remain alive at the end of the term.
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