Skip to content
  1. Home
  2. Insurance
  3. Life Cover
  4. Level Term Life
Print this page

Level Term Life Insurance

A level term life insurance policy is arranged to provide cover for a fixed sum for a specific period, often in line with an interest-only mortgage.

This is because an interest-only mortgage will have a fixed balance outstanding throughout the term of the mortgage and therefore reducing term insurance or decreasing term insurance is not usually suitable.

However you may choose to arrange a level term life insurance policy with a capital and interest mortgage in order to leave a surplus in later years.

Other uses for level term life insurance are for protecting against a known inheritance tax liability for your children or providing a fixed sum for funeral expenses etc.

However, because it is a term insurance policy it should be remembered that there is no investment element and therefore if you live beyond the term of the policy there will be no remaining value.

This is the difference between life insurance and life assurance where an assurance policy will always be paid because it runs for the whole of life.

Therefore life assurance is usually an investment product that may have either guaranteed or equity-linked rewards.

Level term insurance; Typical cover options

Level term life insurance will usually be available as either sole or joint cover.

You may arrange this type of life insurance for anyone in whom you have an insurable interest be that your spouse, business partner, or employee for example.

Joint policies can be arranged to pay on either the first or second death.

You can choose the level of benefit you require or base the benefit around the monthly payment you are willing to make.

The term is set when arranging the policy, and if there is not a definite term in mind a renewable term insurance may be more suitable.

Indexation is an option that allows you to arrange for the sum insured to increase in line with inflation either following indicators such as the retail prices index or by a fixed percentage.

This will have the benefit of ensuring that your cover does diminish in value relative to inflation over time.

Waiver of Premium provides the option to stop paying premiums in the event of a period of ill health after a specific amount of time for example 6 months.

This could be very useful in the case of a critical illness where you may be unable to work for many years prior to the policy paying its benefit in the event of death.

There would also usually be the option to include critical illness cover on the policy and many insurers will also offer the option of income protection to repay mortgage costs etc in the event of long term ill-health.

It should also be considered whether redundancy cover is required as this may mean a specific accident sickness & unemployment insurance policy may be more suitable.

THINK CAREFULLY BEFORE SECURING OTHER DEBTS AGAINST YOUR HOME. YOUR HOME MAY BE REPOSSESSED IF YOU DO NOT KEEP UP REPAYMENTS ON YOUR MORTGAGE OR ANY OTHER DEBT SECURED ON IT. PLEASE NOTE THAT SOME MORTGAGES SUCH AS COMMERCIAL BUY-TO-LET ARE NOT REGULATED BY THE FCA.

RIGHTMORTGAGEADVICE.CO.UK FCA NO. 500795 IS AN APPOINTED REPRESENTATIVE OF JULIAN HARRIS MORTGAGES LTD FCA NO. 304155, WHICH IS AUTHORISED AND REGULATED BY THE FINANCIAL CONDUCT AUTHORITY.

THE FINANCIAL OMBUDSMAN SERVICE (FOS) IS AN AGENCY FOR ARBITRATING ON UNRESOLVED COMPLAINTS BETWEEN REGULATED FIRMS AND THEIR CLIENTS. FULL DETAILS OF THE FOS CAN BE FOUND ON ITS WEBSITE AT WWW.FINANCIAL-OMBUDSMAN.ORG.UK.

THE GUIDANCE AND/OR ADVICE CONTAINED WITHIN THIS WEBSITE IS SUBJECT TO THE UK REGULATORY REGIME, AND IS THEREFORE TARGETED AT CONSUMERS BASED IN THE UK.

© RIGHTMORTGAGEADVICE.CO.UK 2010-2024.

Get advice
Request insurance advice
close the form
Mortgage enquiry details
Your details
Contact details
Enquiry details
Legal Consent