Level-Premium Insurance

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.



Related Video for 'Level-Premium Insurance'

comments powered by Disqus
Hot Definitions
  1. Oil Reserves

    An estimate of the amount of crude oil located in a particular economic region. Oil reserves must have the potential of being extracted under current technological constraints. For example, if oil pools are located at unattainable depths, they would not be considered part of the nation's reserves.
  2. Joint Venture - JV

    A business arrangement in which two or more parties agree to pool their resources for the purpose of accomplishing a specific task. This task can be a new project or any other business activity. In a joint venture (JV), each of the participants is responsible for profits, losses and costs associated with it.
  3. Aggregate Risk

    The exposure of a bank, financial institution, or any type of major investor to foreign exchange contracts - both spot and forward - from a single counterparty or client. Aggregate risk in forex may also be defined as the total exposure of an entity to changes or fluctuations in currency rates.
  4. Organic Growth

    The growth rate that a company can achieve by increasing output and enhancing sales. This excludes any profits or growth acquired from takeovers, acquisitions or mergers. Takeovers, acquisitions and mergers do not bring about profits generated within the company, and are therefore not considered organic.
  5. Family Limited Partnership - FLP

    A type of partnership designed to centralize family business or investment accounts. FLPs pool together a family's assets into one single family-owned business partnership that family members own shares of. FLPs are frequently used as an estate tax minimization strategy, as shares in the FLP can be transferred between generations, at lower taxation rates than would be applied to the partnership's holdings.
  6. Yield Burning

    The illegal practice of underwriters marking up the prices on bonds for the purpose of reducing the yield on the bond. This practice, referred to as "burning the yield," is done after the bond is placed in escrow for an investor who is awaiting repayment.
Trading Center