This is a type of life insurance where your cover lasts for a pre-agreed period hence it’s called ‘term’ and the amount of cover is fixed for the entire duration of cover. Level term insurance pays out a set tax-free lump sum if you were to die during the term of cover.
Level term insurance is best suited for people with financial dependents or a fixed debt, such as an interest-only mortgage. The pay-out is typically used for debt redemption or income replacement.
The term of cover is normally aligned to the term of the fixed debt or the length of time the policyholder’s financial dependent will likely continue to rely on him/her.
Whilst more expensive than a Decreasing Term Insurance, this cover is fairly simple and affordable.