Level-Premium Insurance

AAA

DEFINITION of 'Level-Premium Insurance'

A type of term life insurance for which the premiums remain the same throughout the duration of the contract. The premium paid on this type of policy will be higher at the beginning of its life but lower towards the end of its life as compared to term policies that have rising premium rates.

INVESTOPEDIA EXPLAINS 'Level-Premium Insurance'

This policy is a type of term life insurance, meaning it provides coverage only for a specified duration and it has only a death benefit, no savings component. Therefore, when looking at level-premium insurance, you should carefully consider the length of coverage best suited to your needs. For example, if the primary purpose of the death benefit is to provide income to support very young children and/or fund college expenses, a 20-year level premium might be appropriate. However, if these children are already in their early teens, you may need only a 10-year level premium.

If you enter into this type of insurance policy, it is important to ensure that the premium level is guaranteed. In some cases, a policy's premium level is not guaranteed, and the company can actually raise it to a new premium level which will have to be paid for the remainder of the policy's life.

VIDEO

RELATED TERMS
  1. Death Benefit

    The amount on a life insurance policy or pension that is payable ...
  2. Life Insurance

    A protection against the loss of income that would result if ...
  3. Whole Life Insurance Policy

    A life insurance contract with level premiums that has both an ...
  4. Term Life Insurance

    A policy with a set duration limit on the coverage period. Once ...
  5. Variable Life Insurance Policy

    A form of permanent life insurance, Variable life insurance provides ...
  6. Permanent Life Insurance

    An umbrella term for life insurance plans that do not expire ...
RELATED FAQS
  1. Why is my insurance premium so high/low?

    Insurance premiums can be affected by many factors including: type and amount of risk size of deductible amount of coverage ...
  2. What is the difference between term and universal life insurance?

    Term life insurance is the most basic of insurance policies. It is nothing more than an insurance policy that provides protection ...
Related Articles
  1. Home & Auto

    Are Return-Of-Premium Riders Worth It?

    Find out if this policy coverage will add money to your pocket, or cost you in the long run.
  2. Home & Auto

    Taking The Surprise Out Of Long-Term Care

    Don't be caught unprepared - find out what to look for in LTC insurance policies.
  3. Home & Auto

    Long-Term Care Insurance: Who Needs It?

    No one is immune to the possibility of one day needing long-term care - and the costs can deplete a life savings.
  4. Insurance

    Life Insurance: Putting A Price On Peace Of Mind

    Would your death leave loved ones financially stranded? Find out how to ease your mind and keep them protected.
  5. Options & Futures

    Live Longer, Retire Younger: Can You Do It?

    Use this vehicle to make sure your payout lasts as long as you do.
  6. Insurance

    Life Insurance: How Much Does Age Raise Your Rate?

    If you need life insurance, try to get it before your next birthday. Here's why.
  7. Insurance

    What Happens If Your Insurance Company Goes Bankrupt?

    When insurance companies go bankrupt or face financial difficulty, it's bad news for policy holders.
  8. Insurance

    How to Use a Waiver of Subrogation

    A waiver of subrogation means that a party to a contract waives the right to allow someone (usually an insurance company) to sue the other party to the contract in case of a loss.
  9. Insurance

    Should You Borrow From Your Life Insurance?

    A loan against the cash value of your life insurance isn't the best way to raise money – but sometimes it's the best choice you have. How to decide.
  10. Insurance

    Life Insurance: How Long Does It Take To Get Paid?

    How to file for a life insurance payout – and how long it takes to receive it. Plus, new ways to plan for payments that provide an income stream.

You May Also Like

Hot Definitions
  1. Technical Skills

    1. The knowledge and abilities needed to accomplish mathematical, engineering, scientific or computer-related duties, as ...
  2. Prepaid Expense

    A type of asset that arises on a balance sheet as a result of business making payments for goods and services to be received ...
  3. Gordon Growth Model

    A model for determining the intrinsic value of a stock, based on a future series of dividends that grow at a constant rate. ...
  4. Cost Accounting

    A type of accounting process that aims to capture a company's costs of production by assessing the input costs of each step ...
  5. Law Of Supply

    A microeconomic law stating that, all other factors being equal, as the price of a good or service increases, the quantity ...
  6. Investment Grade

    A rating that indicates that a municipal or corporate bond has a relatively low risk of default. Bond rating firms, such ...
Trading Center