Loading the player...

What is 'Level-Premium Insurance'

Level-premium insurance is 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.

BREAKING DOWN '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.

RELATED TERMS
  1. Term Life Insurance

    A policy with a set duration limit on the coverage period instead ...
  2. Decreasing Term Insurance

    A type of annual renewable term life insurance that provides ...
  3. Variable Life Insurance Policy

    A form of permanent life insurance, Variable life insurance provides ...
  4. Premium Balance

    The amount of premium that is owed to an insurer for a policy, ...
  5. Guaranteed Cost Premium

    Premiums charged for an insurance policy that are not adjusted ...
  6. Guaranteed Issue Life Insurance ...

    A type of financial-protection policy that provides cash to a ...
Related Articles
  1. Insurance

    Should You Buy Term or Permanent Life Insurance?

    When choosing between term or permanent life insurance you'll need to consider these factors.
  2. Insurance

    Term Life Insurance: Everything You Need to Know

    Term life insurance is an affordable way to financially protect your loved ones after your death. Here's what you need to know before purchasing a policy.
  3. Insurance

    Whole or Term Life Insurance: Which Is Better?

    Learn the difference between term life insurance and whole life insurance. Understand when it is beneficial to buy each type of life insurance.
  4. Insurance

    3 Easy Ways to Save Big on Life Insurance

    Buying life insurance can be a tricky process. Here is some guidance for new and existing policies.
  5. Financial Advisor

    Permanent Life Policies: Whole vs. Universal

    If you're looking for life-long security, choosing between these two is the key.
  6. Retirement

    Understanding Different Types of Life Insurance

    Understand the various types of life insurance, how each can be used in personal or business financial planning, and for whom they are best-suited.
  7. Financial Advisor

    7 Issues to Consider When Determining Life Insurance Coverage

    Seven issues to consider when buying life insurance to ensure the coverage is tailored to meet your personal financial situation.
  8. Personal Finance

    The Best Life Insurance for Military Families

    Two of the most common types of life insurance are term and whole life. Here's why the latter isn't a good idea for most military families.
Hot Definitions
  1. Notional Value

    The total value of a leveraged position's assets. This term is commonly used in the options, futures and currency markets ...
  2. Interest Expense

    The cost incurred by an entity for borrowed funds. Interest expense is a non-operating expense shown on the income statement. ...
  3. Call Option

    An agreement that gives an investor the right (but not the obligation) to buy a stock, bond, commodity, or other instrument ...
  4. Pro-Rata

    Used to describe a proportionate allocation. A method of assigning an amount to a fraction, according to its share of the ...
  5. Private Placement

    The sale of securities to a relatively small number of select investors as a way of raising capital.
  6. AAA

    The highest possible rating assigned to the bonds of an issuer by credit rating agencies. An issuer that is rated AAA has ...
Trading Center