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. Whole Life Insurance Policy

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

    A policy with a set duration limit on the coverage period. Once ...
  3. Permanent Life Insurance

    An umbrella term for life insurance plans that do not expire ...
  4. Universal Life Insurance

    A type of flexible permanent life insurance offering the low-cost ...
  5. Variable Life Insurance Policy

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

    A protection against the loss of income that would result if ...
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. Home & Auto

    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 for accidental death and possibly debilitating injuries for a ...
  7. Home & Auto

    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 age of the applicant applicant's medical history applicant's past and ...
  8. Insurance

    Who are the best-rated life insurance companies in the US?

    Learn about what makes an insurance company the best. Read about the best life insurance companies in the U.S. in 2014, following ratings by Weis.
  9. Insurance

    What are some examples of when insurance bundling is a bad idea?

    Learn about situations where insurance bundling may not be a favorable option. Bundling insurance is often a good idea, but there are times when it isn't.
  10. Insurance

    What are some examples of unexpected exclusions in a home insurance policy?

    Learn about commonly excluded perils with different standard insurance policies. Explore events that homeowners should consider when purchasing insurance.

You May Also Like

Hot Definitions
  1. Santa Claus Rally

    A surge in the price of stocks that often occurs in the week between Christmas and New Year's Day. There are numerous explanations ...
  2. Commodity

    1. A basic good used in commerce that is interchangeable with other commodities of the same type. Commodities are most often ...
  3. Deferred Revenue

    Advance payments or unearned revenue, recorded on the recipient's balance sheet as a liability, until the services have been ...
  4. Multinational Corporation - MNC

    A corporation that has its facilities and other assets in at least one country other than its home country. Such companies ...
  5. SWOT Analysis

    A tool that identifies the strengths, weaknesses, opportunities and threats of an organization. Specifically, SWOT is a basic, ...
  6. Simple Interest

    A quick method of calculating the interest charge on a loan. Simple interest is determined by multiplying the interest rate ...
Trading Center