Level Term Life Insurance PDF Print E-mail

Level Term Life Insurance

Level term insurance offers premiums that remain level for a certain number of years. Commonly, level term is offered with guaranteed level premiums of 5, 10, 15, and 20 or even 30 years: Most level term policies are more expensive than yearly revewable policies in the first few years. However, if you are planning to keep your life insurance for 5, 10, 15, or 20 years, level term will end up being far less expensive than a single annual or Yearly Renewable Term (YRT) policy. Level term policies are usually renewable after the initial term (5, 10, 15 or 20 years). This means you can renew the coverage at the end of the term if you are willing to pay more premiums. Keep in mind that at the end of the initial term the premiums will have gone up significantly. Some level term policies are not automatically renewable at the end of the term. These policies should generally be avoided. Unless it is considerably more expensive, we recommend purchasing a level term policy with a conversion option. This option will allow you to convert to cash value life insurance without evidence of insurability (no medical exam or questions need be completed). This option becomes very important if you decide to keep your life insurance beyond the initial term of the policy, and your health has deteriorated.

After the initial term (5, 10, 15 or 20 years) a level term policy will often become a yearly renewable policy, with premiums that rise annually. Alternatively, some level term policies will continue, but at a higher level premium for some period of years. For example, a 10-year level term policy might have a rate increase in the eleventh year. The rate increase might result in another premium that is level for ten years. When a level term policy reaches the end of the initial term, the policy is repriced. If a re-entry premium is offered and you are still in good health, this may be your best option. At the same time, you should look at what else is available on the marketplace. Before changing any life insurance policy, an insured person should consider the pros and cons of replacement. Call your Alliant professional for life insurance guidance and recommendations.