Level Term Life Insurance

Level term life insurance provides consistent premiums and a death benefit that remains the same, or level, until the end of the policy. Level term is the most popular type of term life insurance.

Rachel Christian, writer and researcher for RetireGuide
  • Written by
    Rachel Christian

    Rachel Christian

    Financial Writer and Certified Educator in Personal Finance

    Rachel Christian is a writer and researcher for RetireGuide. She covers annuities, Medicare, life insurance and other important retirement topics. Rachel is a member of the Association for Financial Counseling & Planning Education.

    Read More
  • Edited By
    Matt Mauney
    Matt Mauney, Senior Editor for RetireGuide

    Matt Mauney

    Financial Editor

    Matt Mauney is an award-winning journalist, editor, writer and content strategist with more than 15 years of professional experience working for nationally recognized newspapers and digital brands. He has contributed content for ChicagoTribune.com, LATimes.com, The Hill and the American Cancer Society, and he was part of the Orlando Sentinel digital staff that was named a Pulitzer Prize finalist in 2017.

    Read More
  • Financially Reviewed By
    Eric Estevez
    Eric Estevez, Independent Licensed Life Insurance Agent

    Eric Estevez

    Owner of HLC Insurance Broker, LLC

    Eric Estevez is a duly licensed independent insurance broker and a former financial institution auditor with more than a decade of professional experience. He has specialized in federal, state and local compliance for both large and small businesses.

    Read More
  • Published: August 20, 2020
  • Updated: January 17, 2023
  • 3 min read time
  • This page features 5 Cited Research Articles
Fact Checked
Fact Checked

A qualified expert reviewed the content on this page to ensure it is factually accurate, meets current industry standards and helps readers achieve a better understanding of retirement topics.

Cite Us
How to Cite RetireGuide.com's Article

APA Christian, R. (2023, January 17). Level Term Life Insurance. RetireGuide.com. Retrieved July 14, 2024, from https://www.retireguide.com/life-insurance/term/level/

MLA Christian, Rachel. "Level Term Life Insurance." RetireGuide.com, 17 Jan 2023, https://www.retireguide.com/life-insurance/term/level/.

Chicago Christian, Rachel. "Level Term Life Insurance." RetireGuide.com. Last modified January 17, 2023. https://www.retireguide.com/life-insurance/term/level/.

What Is Level Term Life Insurance?

Level term life insurance guarantees fixed premiums for as long as your policy is in place. Your rates will not go up.

Likewise, the death benefit amount — or the money your family receives if you die — stays consistent over time.

When people talk about term life insurance — or policies that last for a specific period, such as 10, 20 or 30 years — they’re usually referring to a level term policy. This is the most popular type.

Term policy benefits expire when the term ends, and there’s no buildup of cash value.

If you don’t renew your life insurance at the end of its term, coverage lapses, and your beneficiaries will not receive payment from the insurance company if you die.

This contrasts with permanent life insurance, which never expires but comes with higher monthly premiums.

There are other, less popular types of term life insurance, such as decreasing term, where the death benefit gradually declines each year the policy is in place. Alternatively, an increasing term policy includes a death benefit that grows larger over time.

Finally, renewable term life allows you to extend the term without having to reapply for new coverage.

Benefits of Level Term Policies

Level term life insurance offers several key benefits, including affordability and consistency.

Advantages of Level Term Life Insurance
Affordable Coverage
Term life insurance policies are more affordable than permanent life insurance options, even for the same death benefit coverage amount.
Stable Premiums
One of the most attractive features of level term policies are fixed premiums. There are no surprises. You know exactly how much to pay each year or month for coverage.
Consistent Death Benefit
The amount of money your family receives when you die does not fluctuate. This can offer peace of mind that your beneficiary receives the amount of money you want.
Simple Coverage
Level term life insurance is easy to understand, with few extra fees or charges. These policy types are straightforward: The face amount of your contract is always equal to the death benefit.

What Happens When the Level Term Ends?

When your level term life policy expires, your coverage will end along with your payments to the insurance company.

You will not receive anything else from the insurer — and you’re no longer obligated to pay premiums.

If you want your coverage to continue, you have a few options.

For example, some policies offer a conversion feature, which allows you to convert to a permanent form of life insurance.

Or you may be able to keep your current policy in force by continuing to pay your premiums. You usually don’t need to undergo a new medical exam. This can be a good option if you cannot qualify for a new policy because of changes in your health.

However, if you do this, the cost to keep the policy in force will increase significantly.

You can also try to purchase a level term policy from a new insurance company. Keep in mind that a medical exam will likely be required and buying coverage when you’re older will always cost more.

How Much Does Level Term Life Insurance Cost?

The cost of level term life insurance depends on several factors, including your age and health at the time you purchase your policy.

The term length and coverage amount you select also plays a role.

According to Life Happens — a nonprofit organization focused on consumer life insurance education — a healthy 30-year-old man can expect to pay about $13 a month for a 20-year level term policy worth $250,000.

Many people think term life insurance costs more than it does. According to the 2018 Insurance Barometer study conducted by Life Happens and Limra, an insurance industry group, nearly half of millennials estimate the cost of term life insurance to be five times higher than the actual price.

Last Modified: January 17, 2023

5 Cited Research Articles

  1. Kinney, J. (2020, January 17). What Is Term Life Insurance? Retrieved from https://www.usnews.com/insurance/life-insurance/term-life-insurance
  2. American Council on Life Insurance. (2018, October 28). 2018 Insurers Fact Book. Retrieved from https://www.acli.com/-/media/ACLI/Files/Fact-Books-Public/07FB19FChap7LifeInsurance.ashx?la=en
  3. American Council on Life Insurance. (2018). What You Should Know About Buying Life Insurance. Retrieved from https://www.acli.com/-/media/ACLI/Files/Consumer-Brochures-Public/What_You_Should_Know_About_Buying_Life_Insurance.ashx?la=en
  4. LIMRA and Life Happens. (2018). 2018 Insurance Barometer Study. Retrieved from https://www.limra.com/en/research/research-abstracts-public/2018/2018-insurance-barometer/
  5. Life Happens. (n.d.). What is the average life insurance cost? Retrieved from https://lifehappens.org/life-insurance-101/what-is-the-average-life-insurance-cost/