Published by Joe Davine on
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Getting level term life insurance

If you have dependents or debts, it’s important to think ahead and consider taking out a life insurance plan. We’ll take you through the ins and outs of level term life insurance, to explain what it is, who it benefits, and to help you decide if this is the right type of policy for you.

What is level term life insurance?

Level term life cover is a type of policy which allows you to set an agreed length of time you will be covered for (called the ‘term’), and make fixed monthly payments throughout this period (known as ‘premiums’).

If you pass away during this term, then your insurance provider will make a lump sum payment to your loved ones. However, if you don’t die during this period, you will not be eligible for a payout at the end of your cover, or when you do pass away.

Who can benefit from a level term life insurance policy?

Anyone can benefit from having life cover in place, but specifically those with dependents. If you have a family and are looking to get insured for a fixed period at a reasonable price, a level term policy is worth considering. Often these policies are used to mitigate the effects that your death may have on your family if it were to come earlier than expected.

Whether you’re looking to take out a mortgage or you have other debts such as loans or credit cards, level term life policies help you protect the financial stability of your loved ones.

The pros and cons of level term life insurance


  • You control the term length of your policy before you sign anything.
  • You agree on the set payout amount for when you die. This payout will be the same whether you die at the beginning or end of the policy term.
  • Reasonable, consistent premiums that remain the same throughout the policy term.


  • When the time comes to renew your policy or take out a new cover, you’ll find that the premiums will have increased, either as a result of inflation or your increased age.
  • If you don’t pass away within the policy term, you won’t get any form of payout.

How is level term life insurance different to other policies?

Term life insurance vs life assurance

The principal difference between life assurance and term life cover is that life assurance is a whole-of-life policy. Whereas term cover only covers you for a set amount of time, life assurance will never expire (so long as you keep paying the premiums).

Life assurance policies often build up a cash value over time that is tax-deferred. This means that, unlike term cover insurance, life assurance policies often have a cash in value. Throughout the policy, the cash value grows proportionally to the premiums you pay and if you cancel the policy, you are then entitled to some of that cash value.

The premiums with term life insurance policies tend to be lower than with life assurance. This is because life assurance policies are guaranteed to pay out and therefore the insurers have to cover themselves more. The exact rate of premiums for either type of policy will depend on the provider.

Level term vs increasing term

With an increasing term policy, your cover amount increases over time, as do your monthly premiums. This type of policy is beneficial for anyone looking to cover their salary, pay their child’s university fees, or just make sure their cover doesn’t reduce in value over time.

This type of cover is designed to protect you from the effects of inflation, ensuring the value of your payout remains constant against the increasing cost of living. However, bear in mind that often your premiums will rise at a faster rate than the cash benefit, so it’s important to read the small print.

Level term cover vs decreasing term cover

Contrary to increasing term, with a decreasing term life cover policy the amount of coverage you have goes down over time. Your monthly premiums maintain at the same rate throughout the length of the term, but tend to be at a lower rate than with level term life policies.

This type of policy can be beneficial if you’re looking to pay off your mortgage or to cover any other debts that reduce in value over time.

Is a level term life insurance right for me?

That depends on your circumstances. When deciding if level term cover is the best option for you, firstly you’ll need to determine why exactly you want life cover, and what you’re looking to cover. Then you’ll want to consider the following in relation to your specific needs:

How much does a level term life insurance policy usually cost?

The price of your monthly premium typically starts from around £10. Even though you’ll often see policies advertised from £5, this unlikely to be what you’ll pay, especially if you’re looking for a decent level of coverage.

Any figures which generalise the cost of a level term cover policy will be extremely inaccurate; once it comes to applying for the policy and you supply your personal information, the price of the quote you were offered could drastically change.

For example say you are a non-smoker in their thirties, with a typical direct insurer you could expect to pay around £8.70 per month. Whereas, if you’re a smoker in their forties, you could potentially pay £53.50 per month for a level term policy with the same cash benefit.

Factors which can affect your premiums include:

  • Your age.
  • Your location.
  • The amount of cover you’re looking for.
  • The term length.
  • Your medical history.
  • Your family’s medical history.
  • Your lifestyle.

Specifically with a level term life policy, the length of the term you choose, the size of the payout you want, and any additional service will also have a considerable bearing on the cost.

How much coverage does level term life insurance offer?

This will be entirely dependent on the policy and your circumstances. It’s impossible to give you an accurate estimation of how much coverage level term insurance offers, as each policy is tailored to the person being insured.

It is possible to get policies that will pay out millions, but only if you’re looking to pay out considerable monthly premiums and fit certain criteria. The majority of people take out coverage in the hundreds of thousands of pounds.Much like with everything you choose when it comes to life cover, the policy that best fits you will cater to your specific needs and financial circumstances.

What happens when my policy ends?

When you reach the end of your level term life insurance policy, as you’ll have survived the term of your policy, it won’t pay out. If you’d like to continue to be insured, you often have multiple options for extending, converting or renewing the coverage.

  1. Extension: With some policies you have the option of reassessing your financial situation, and deciding to extend your current coverage further, for a longer term. However, if you do choose to continue the coverage, then your premiums are likely to be higher due to your increased age.
  2. Conversion: Companies often offer you the ability to convert your policy into a more suitable one for your current needs. This conversion often must take place within a certain specified period, before a certain age (e.g. before your 70th birthday), or indeed at any point during your current term - however you must start the conversion process before the policy term ends.
  3. Taking out a new policy: Finally, you always have the option of just applying for a new life cover policy, whether that’s with the same company or a different one - regardless of which route you choose to take with renewal, you’ll need to retake a medical assessment, to prove you are still in good health. Once again, your premiums are likely to have increased as you’ll be older.

Does my level term life insurance policy have a cash-in value?

No, insurers don’t allow you to cash in the value of level term life policies.

How long are level term life insurance terms?

Term life cover can range anywhere from 1 year to around 50 years. The most common terms for level term life policies are 10, 15, 20, and 30 years, but this will vary from company to company, and be dependant on your age when you apply.

How long the length of your policy should be, very much depends on why you’re taking out the cover in the first place, whether it’s:

  • To cover your mortgage.
  • To support your dependents financially, such as your children or spouse.
  • To cover your future inheritance tax.
  • To cover your funeral costs.

It’s important when choosing the term length to consider any future expenses you’ll to cover. Whether it’s helping your child through university, or realising that by the time any children you have has grown up and moved out, you may not need as much cover, it’s important not to insure yourself for more or less cover than you need.

Is there an age limit on level term life insurance policies?

Depending on the insurer and the length of term you’re looking to take out, there will be an age limit when it comes to taking out a level term life cover policy, usually around 70 years old. As life insurers use age and health as factors to determine your risk, it’s likely that your premiums will be considerably higher the older you are.

How can I get a level term life insurance quote?

We can help with that. In our reviews we deconstruct each policy and insurance provider to help you find the best life cover to suit your needs. We recommend reading through all the information to make sure you know all the details of a policy so you’re sure it’s right for you.

If you want to get a quote in minutes, then click the button below and we’ll help you find exactly what you’re looking for.