Level Term Life Insurance

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Contributor, Benzinga
January 5, 2022

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There are 2 main types of life insurance that are considered the most popular: term and whole life. Whole life insurance lasts the insured’s whole life, while term only lasts for a certain period of time. In addition, there are several different types of whole and term life insurance. 

One type of term life insurance is level term life insurance, which is a common policy option that has a set death benefit and set premium that doesn’t change. To put it simply, the insurer will pay a death benefit of the same amount no matter if you die at the beginning or the end of the term.

What is Level Term Life Insurance?

Level term life insurance is an insurance policy that has the same death benefit amount throughout the entire term of the policy. The term lasts for a determined amount of time and throughout that time, both the death benefit and the premiums stay “level,” meaning they don’t change. When you lock into a level term life insurance policy, you’ll lock in a set premium, which allows you to easily estimate how much you’ll pay in total for your policy. Level term life insurance is the most common type of term life insurance policy sold. 

How Does Level Term Life Insurance Work?

Level term life insurance works the same as any other term life insurance policy. It lasts for a certain term period, then expires. In the event that the insured dies during the term, the death benefit is paid out. If the insured does not die during the policy term, the policy expires worthless. Some insurance companies also offer you the option of converting your term life insurance policy to a whole life insurance policy after your term reaches its conclusion. 

Level term insurance is considered to be one of the simplest types of life insurance because it is very straightforward and easy to understand. You simply pay a premium, then your beneficiaries get your benefit if you die within the term of the policy. Your premiums and your death benefit will never change so long as you continue paying your premiums each month, and you won’t need to worry about the cash value benefit that you would get with a whole life insurance policy

Purchase a specific policy term: As with any term life insurance policy, you purchase the policy for a specific period of time, referred to as the policy’s “term.” Most life insurance companies sell level term policies with terms between 10 and 30 years. You can choose the policy term based on the level of coverage you think you need. If you choose a policy with a longer term, you’ll usually pay more each month to maintain your coverage. 

Get to know your death benefit: Your death benefit is the amount of money that will be paid to your beneficiaries upon your death. With a level term insurance policy, the death benefit will only be paid if you die during the term period. If you outlive your policy, you’ll have the option to let it expire or convert the policy to a whole life insurance policy, a form of permanent life insurance. 

The death benefit never changes: As long as the policy is active and you pay the premiums, your death benefit will never change. No matter if you die during your second year of the policy or your 25th year of your 30-year policy, the death benefit that is paid to your beneficiaries will be the same amount. In addition, there is no other value aside from the death benefit in a level term life insurance policy so there is absolutely nothing changing the benefit.  

Benefits of Level Term Life Insurance

There are a number of benefits that come with a level term insurance policy, with one of top being the affordability of a policy. The premiums that you’ll pay each month for term life insurance policies are significantly lower when compared to whole life insurance policies with the same death benefit. This means that term life insurance is an option for more people who want to protect their families after their passing. 

Level term life policies are also predictable and simple to understand, which can be refreshing in the world of life insurance. Some other benefits include the following.

Easy to make future plans: Due to the fact that you know how much the death benefit will be no matter when you die within your term, your beneficiaries can easily make plans knowing exactly what they’d be getting. There is only one value to consider, so plans can be made with that in mind without having to wonder what the death benefit might be. For example, if you want to be sure that your spouse will have enough money to pay off your mortgage loan should you die before your amortization schedule reaches its conclusion, you might choose a policy with a death benefit equal to what you currently owe on your loan. 

You know what you’re paying for: A term level insurance policy does not have any value other than the death benefit, so you know exactly what you’re paying for the entirety of the term.
You also don’t have to worry about whether the death benefit amount will be enough for your loved ones because it will be the exact amount that you chose. There’s no uncertainty when you’re paying the premiums of whether the death benefit will amount to a number that will give your beneficiaries security so long as you’re confident in the benefit you’ve chosen. 

You can convert to an annual renewable policy if needed: An annual renewable policy has a term of one year and is renewed each year. The premium rates will go up each year as you get older, but you usually aren’t required to undergo any additional health examinations. While you won’t be needing to pay higher premiums based on diminished health, your rates will be subject to inflation and the probability that you will die during the next year. 

Disadvantages of Level Term Life Insurance

As with all other life insurance policy options, there are disadvantages which could result in a level term policy not being the right option for you and your family. The following are a few disadvantages to consider before you sign on for coverage. 

Your financial needs might change: Whether your lifestyle causes an increase in financial needs or a decrease, the level term policy won’t reflect that or change with you. Due to the premiums and death benefit staying level, your needs may change, leaving the death benefit to not fit what is needed, or you could be left paying a premium on a policy that is too much for the amount of coverage that you need now.  

You might outlive the policy: The possibility of outliving the policy is a disadvantage for all term life insurance policies, level term included. If you are still alive when you reach the term of your life insurance policy, the policy will expire worthless in most cases.  

Compare Level Term Life Insurance

Choosing coverage can be challenging — but it doesn’t need to be when you do your research. Consider beginning your search for coverage by checking out our reviews and insights on the following insurance providers. 

  • securely through Guardian Life's website
    securely through Guardian Life's website
  • securely through Ladder Life Insurance's website
    securely through Ladder Life Insurance's website
    Best For:
    Adjustable coverage
    Read Review

    Ladder Insurance Services, LLC (CA license # OK22568; AR license # 3000140372) distributes term life insurance products issued by multiple insurers – for further details see ladderlife.com. All insurance products are governed by the terms set forth in the applicable insurance policy. Each insurer has financial responsibility for its own products. Coverage amounts vary by state.

  • securely through Sproutt Life's website
    securely through Sproutt Life's website
    Best For:
    People with healthy lifestyles
    Read Review
  • securely through Bestow Life Insurance's website
    securely through Bestow Life Insurance's website
    Best For:
    Term life insurance
    Read Review

    *excludes New York

Get Level Term Life Insurance Today

If you’re considering purchasing a level term life insurance policy, it’s always best to begin your search as soon as possible. Signing onto a life insurance policy earlier in life can help you access the most advantageous rates. Begin by requesting quotes from a few competing insurance providers — you might be surprised by how affordable life insurance is.  

Frequently Asked Questions


What happens at the end of a level term life insurance policy?


At the end of a level term life insurance policy, you’ll be left needing to make a decision to either purchase a new policy or go without life insurance. In the case you choose to purchase a new policy or convert to a permanent life insurance policy, it will be at a higher price than your original policy. 


What is better: term or whole life?


There is no way to call one type of insurance the “better” type of life insurance because the policy that is right for you is entirely dependent on your individual situation. While a whole life policy may have a cash value, premiums are more expensive than term life policies. However, term life insurance only offers coverage for a certain period of time, while a whole life policy covers you for life. 


Benzinga crafted a specific methodology to rank life insurance. To see a comprehensive breakdown of our methodology, please visit our Life Insurance Methodology page.