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What is level term life insurance?

When it comes to finances, predictability is a priority for many individuals. Fixed rate mortgages, zero interest loans and guaranteed quotes are just some of the ways consumers enjoy peace of mind knowing exactly what they’ll pay and when they’ll have to pay it.

When it comes to life insurance, this same peace of mind can be found in the form of level term life insurance.

Level term life insurance is a type of term life insurance policy for which the premium payments and death benefits remain the same throughout the lifetime of the policy. If the policy is worth $250,000 and costs $30 per month during the first year of the policy, it will still be worth $250,000 and cost $30 per month during the 20th year of the policy.

What makes level term life insurance unique?

Fixed premiums and death benefits make level term life insurance unique from other types of life insurance that are available.

  • Renewable term life insurance operates on a series of one-year contracts that expire and renew every year. While the death benefits remain stable, the premiums increase with each annual renewal.
  • Decreasing term life insurance usually features fixed premiums, but the death benefits gradually decrease each year.
  • Some term life insurance policies may include “indeterminate” premiums, which provide a set schedule of maximum premium increases. While these policies can still provide a degree of cost predictability, the premiums will still likely go up over time. Other types of policies will feature premiums that remain fixed for a certain number of years and then are allowed to increase thereafter. Only level term life insurance features premiums that will not increase during the life of the policy.

For permanent life insurance, some policies contain investment options that can pay out dividends to owners, which can thereby reduce the cost of the premium. Those dividends are dependent upon the overall performance of the policy and are subject to the ebbs and flows of the market. Dividends, loans, withdrawals and other actions taken on behalf of cash value life insurance can affect the overall value of the death benefits.

Benefits of level term life insurance

There are certain benefits of level term life insurance that may attract many consumers to this type of policy.

  • Having fixed premiums can help allow for simpler and more predictable budgeting.
  • Life insurance rates are dependent largely upon the age and health of the insured. A level term policy allows you to lock in a lower rate while you’re still relatively young and healthy.
  • If your health takes a turn for the worse in the future — be it cancer, a heart attack or illness — your rates will not go up and you’ll have the same coverage you always did when you need it most.
  • Term life insurance is generally more affordable for most than permanent life insurance.

To learn more about level term life insurance or to shop for available policies in your area, contact an AIG-appointed life insurance agent at 1-866-971-4232.

Agency services provided by AIG Direct Insurance Services, Inc. ("AIG Direct"), CA license # 0B57619 and AR license # 0100105378, a subsidiary of American General Life Insurance Company ("AGL"), Houston, TX and an affiliate of The United States Life Insurance Company in the City of New York ("US Life"), New York, NY, all members of American International Group ("AIG").

Policies issued by: American General Life Insurance Company (AGL), Policy Form Numbers ICC16-16901, 16901, ICC16-16900 and 16900 except in New York, where issued by The United States Life Insurance Company in the City of New York (US Life), Policy Form Numbers 16901N and 16900N. Issuing companies AGL and US Life are responsible for financial obligations of insurance products and are members of American International Group, Inc. (AIG). Products may not be available in all states and product features including rates may vary by state. All guarantees and benefits of the insurance policy are backed by the claims-paying ability of the issuing insurance company. They are not backed by the broker/dealer and/or insurance agency selling the policy, nor by any of their affiliates, and none of them makes any representations or guarantees regarding the claims-paying ability of the issuing insurance company. ©2018. All rights reserved.

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