With a range of term insurance plans available in the market, it is easy for a customer to be overwhelmed by the information. This may especially be the case if you are dealing with the various sub-types of term plans but are not experienced at distinguishing between them.
There are some key features that help these plans stand on their own, and knowing these can help you distinguish between them better. You can start with knowing more about a level term insurance plan, which is the fundamental form of term life insurance.
Let’s look at what level term insurance is, how it stands apart from other term plans, and whether it is the right option for you.
Understanding Level Term Insurance
If you are new to term insurance, some of the first few things you may hear about it are the simplicity of its design and its cost-effectiveness. One may argue that the best of these features is showcased in a level term insurance plan, which is a no-frills sub-type of term insurance.
Within a level term insurance plan, you will not come across any maturity benefits. The plan mainly offers a death benefit. To break it down further, the policyholder pays the premium for an agreed-upon sum assured, after certain factors are taken into consideration. If the life assured were to pass away when the policy was in force, the nominee or beneficiary can claim the death benefit.
The scope of this life insurance plan can be expanded with the addition of riders if the insurer is offering that option. However, these additions will not extend towards a maturity benefit. Some of the common rider options are accidental death, accidental permanent disability, and premium waiver.
Another way that this plan differs from other term insurance sub-types is that the premium amount is expected to be constant throughout the premium payment duration. This is not the case with increasing or decreasing term insurance plans. Level term insurance allows you to plan your finances with much more ease, allowing you to understand how this plan can fit into your budget.
How Does it Stand Apart?
It is quite easy to club all term life insurance plan options together. There are not many easily noticeable differences, especially for someone not well-versed with the particulars of insurance. However, a quick closer look can tell you that a level term insurance plan is one of the simplest life insurance options available in the Indian market. A primary comparison with other options can help confirm this.
Let’s consider a term insurance with a return of premium option against a level term life insurance plan. The former is often considered to be a solid choice for customers keen on a maturity benefit, even if it comes in the form of a no-profit return of the premium paid into the plan.
On the other hand, the level term plan may not offer any of these benefits. Instead, it offers simplicity in its design and cost-effectiveness. This can make it accessible to a wide range of people, allowing them to prioritise the wellbeing of their family and prepare them to face future uncertainties. You can use a term insurance calculator to figure out the difference in the premium costs, which may help you make an informed decision.
Level term insurance can come in several forms.
Types of Level Term Insurance
Here are the main types of level term plans:
1. Standard Level Term Insurance
This is the simplest form where both the premium and the death benefit remain unchanged for the entire policy duration. It ensures predictability in costs and guarantees that your loved ones receive a fixed payout if something happens to you during the term. This type of level term insurance policy is well-suited for those who want simple protection without additional features.
2. Return of Premium (ROP) Level Term Insurance
In this level term insurance option, the insurer refunds all premiums paid if you outlive the policy term. For example, if you paid ₹20,000 annually for 20 years, the total ₹4 lakh would be returned to you at maturity. While this provides a kind of safety net for your premiums, the costs are higher when compared to standard life insurance plans. It works well for those who see insurance as both protection and disciplined savings.
3. Joint Level Term Insurance
Designed for couples, this policy covers two lives under a single plan. The payout is usually triggered on the first death (first-to-die policy) or sometimes after both insured individuals pass away (second-to-die policy). This type of level term life insurance plan can be cost-effective when compared to the purchase of two separate policies.
4. Riders with Level Term Insurance
While not a separate type, many level term insurance policies allow add-ons like accidental death benefits, critical illness coverage, or waiver of premium. These riders enhance the scope of protection and can be tailored to suit specific lifestyle and health considerations.
Using a term insurance calculator can help you get an idea of the costs involved for different types of plans.
Benefits of Level Term Insurance
Now that you know what level term insurance is, and what are its types are, let’s look at its benefits as well:
1. Simple and Predictable Coverage
One of the biggest advantages of level term insurance is its simplicity. Both the premium and the death benefit remain unchanged for the entire term. This helps policyholders plan their finances without worrying about fluctuating costs.
2. Affordable Protection
Compared to many other life insurance plans, level term insurance is one of the most affordable options. You can secure a high sum assured at a relatively low cost. Thus, it is ideal for young earners, families, and anyone who wants maximum coverage within their budget.
3. Guaranteed Death Benefit
A level term life policy provides a fixed payout to your beneficiaries. Whether it is repaying debts, funding children’s education, or maintaining household expenses, the assured amount helps your loved ones manage long-term obligations.
4. Flexibility and Choice
While standard plans are available, insurers also offer return of premium and joint level term plans. Some may even allow upgrades to permanent life insurance. Using a term insurance calculator, you can compare different term insurance plans and choose the one that aligns with your budget and future goals.
Should You Buy Level Term Insurance?
Let’s look at who may find a level term life insurance plan suitable for them.
People with a low budget
If you are hunting for a cost-effective life insurance plan without compromising on the sum assured, a level term life insurance plan may be right for you. It allows you to establish a foundation of financial security for your family without having to burn a hole in your pockets.
People with liabilities
Whether it is a vehicle loan or a home loan, it may be worthwhile to support this liability with a level term plan. This allows you to shield your family against the burden of the liability and have an affordable life cover only for as long as necessary.
Young professionals
While life insurance is important, there may be several responsibilities that may take priority during the early stages of your career. Fulfilling all of them may seem like a herculean task. Opting for a level term plan may help you keep the budget in check without compromising on your life cover needs.
Housewives and non-working individuals
Even people who do earn may be contributing significantly to their households in other ways. If you are a housewife or someone not supporting your loved ones financially but still wants to ensure their wellbeing after you are gone, a level term plan is an option you may want to look into.
Term insurance for housewives can be a valuable tool to provide financial security and peace of mind for families.
To sum it up, a level term life insurance policy is one of the most accessible term plans when it comes to design and cost. If you are looking to keep it simple, these kinds of term insurance plans may be the right plans for you.
Customers 
Distributor 
Partner with Us 
Employee 
