What is Level Term Insurance? Meaning, Features, and Benefits

What are Term Insurance Plans? 

Term insurance plans are the most basic form of life insurance available in India. These plans offer pure life cover for a set duration (the policy term) in exchange for regular premium payments. Life cover financially secures your loved ones in case of your untimely passing during the policy term. To put it simply, term life insurance plans are ideal for those who want to secure their family even in their absence.  

Different Types of Term Plans 

Nowadays, even term insurance plans have multiple variants such as return of premium plans or increasing term plans etc. But if you want the most basic and affordable life insurance product, then what you’re looking for is a Level Term Plan. Level term plans are affordable, simple to understand, and offer adequate life cover to protect your loved ones. Here is a quick breakdown of all the features and benefits you can find in a level term insurance plan.  

Defining Level Term Life Insurance Plan 

A basic term plan where the sum assured on death (life cover) does not increase or decrease over time is known as a level term plan. Since the life cover element remains static throughout the policy term, level term plans tend to be the most affordable life insurance product available in the market. Most level term plans also have option benefits or addons (known as riders) that you can purchase to enhance your coverage. 

Advantages of a Level Term Plan 

Level term plans are still one of the most popular life insurance products available in India. In spite of their simplicity, level term plans have multiple advantages that make them an attractive investment for those looking to secure their families.  

• Simple to Understand Terms & Conditions 
  Level term plans are quite easy to comprehend, and even those without any knowledge of life insurance can quickly grasp the benefits offered by such plans. There are no returns, increasing premiums, or rate of interest to keep track of. All you need to know is that you get a set amount of life cover in exchange for regular premium payments.  

• Affordability 
  Due to their simple nature, level term plans remain one of the most affordable life insurance options available in India. The premium rates for level term plans will generally be much lower than that of guaranteed income plans, Unit-Linked Insurance Plans (ULIPs), or whole life insurance plans. If you want to lowest premium rates for a relatively high life cover, you should buy a level term plan when you are young. This way, you will remain protected for a low cost, even if your health deteriorates as you grow older.  

• Stability and Upfront Costs 
  In a level term plan, both your sum assured, and your premium rates remain the same throughout the policy term. Meaning that you don’t have to worry about paying additional premiums later down the line. Level term plans also disclose all their costs upfront. You know exactly how much premium you need to pay throughout the policy term. And since the premium amount never changes, you can easily calculate your total premium expense before finalizing your policy purchase.  

• Option to Increase Protection 
  Most term insurance plans come with a host of optional benefits that improve your policy’s features. For example, Edelweiss Life- Zindagi Protect Plus has the Child’s Future Protect Benefit for those who want extra protection for their little one. Or you can choose the Premium Break Benefit to skip up to eight premium payments at any time during the policy term. You can also choose to add riders to your plan to expand your coverage. A rider that is frequently selected is ‘The Critical Illness Rider’. With this rider, you can ensure your family’s financial protection in case you are diagnosed with a serious disease or medical condition.  

Downsides of a Level Term Plan 

Having a static sum assured is both an advantage and a disadvantage. When your life cover is static, you cannot increase the amount even if your net worth increases in the future. For example, your cost of living will inadvertently increase when you get married or become a parent. But with a level term plan, you will not be able to increase your sum assured to match your family’s greater financial requirements.  

Hence, level term plans are a great option thanks to their simplicity and affordability but fall short when it comes to providing long term protection for a growing household.  

Conclusion 

Level term plans are the ideal life insurance products for those who want pure life cover to protect their loved ones. They are affordable and all premium costs are declared up front before you even purchase the plan. However, the static nature of level term plans means that you cannot increase your coverage after major life events like marriage, childbirth, or a significant promotion. But the upside is that level term plans allow you to choose a policy term that suits your personal needs, making them the first choice for anyone looking for a basic life insurance policy.