Level Term Life Insurance | Get a Quote (2024)

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Level term life cover can help provide for your loved ones or pay off an interest-only mortgage after your death. We’ve compared its benefits with other types of term life policy.

Level term life insurance provides your loved ones with a fixed lump sum if you die within the policy term.

Knowing they’ll get a specific amount can help you all plan for a time when you're no longer around. And they can use the money to pay off debts, an interest-only mortgage, maintain their lifestyles or gift to the next generation.

There are a few reasons you might choose level term over decreasing or increasing term policies.

If you want the peace of mind of knowing you’ve provided for your loved ones or to contribute to their financial security after your death, it may make things feel more secure.

If you’ve a large estate and you know your loved ones can expect a sizeable bill, you might help them meet this obligation without reaching into their personal coffers.

People also take out level term insurance to prevent disruption to their loved ones’ lives should the policyholder die.

For example, if you’ve a child who’s recently enrolled in a fee-paying school, level cover may ensure they can stay in their preferred environment. Level term may be more appropriate than increasing term cover because the time your child is in school won’t be significantly impacted by the effects of inflation.

When choosing life insurance, it's most important to consider what you'd want the payout to go towards.

If you have an interest-only mortgage, the payout from a level term policy can help those you leave behind pay it off.

If you just want to leave loved ones a legacy, level and increasing term life insurance may suit you. Consider increasing term cover if you want your policy to last a long time and adjust with inflation.

If you have personal debts, you may want to consider decreasing term life insurance. This is more specifically designed to repay ongoing financial commitments.

However, your beneficiaries can use your level term payout to clear your outstanding debts. With level cover from Post Office, if you keep paying your premiums and your policy remains valid, you can choose to leave your loved ones as much as £750,000, depending on age.

Level term cover option

Here's a quick summary of how the level term cover option works on Post Office Life Insurance.

Level term cover offers a fixed sum which doesn’t adjust for inflation. This means that its value when it’s paid may be less than its value when it was purchased.

If you think of the value of the property market as an example, £500,000 was worth considerably more a decade ago than it is today. If the policy covers a short period of time, the difference will be minor. But life insurance policies are typically designed for longer periods, so the total value of coverage may be worth less in 30 or 40 years compared with the same amount today.

It’s important to note payouts from level term life cover may be subject toinheritance tax. This is something to consider when deciding how much cover you need.

What are the advantages of decreasing and increasing cover?

Post Office offers three types of term life insurance. As well as level term cover, we can provide decreasing and increasing term cover too.

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  Decreasing term life insurance

  If you have a repayment mortgage, decreasing term cover may suit you better. It maintains the same value as your mortgage while you pay it off. Your payout decreases in value as your mortgage gets smaller. And it gives peace of mind that, if you die while repaying your provider, your outstanding debt won’t fall to your loved ones. The cap on mortgage interest rates insurers cover can differ by provider. Always ensure it’s in line with your mortgage. If your mortgage interest rate is 8% or less, Post Office Life Insurance  decreasing option may be right for you.

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  Increasing term life insurance

  Increasing term cover considers the rising cost of living (inflation), so the payout value increases over time. Your premium payments also increase. They’re often higher than for level and decreasing cover (for the same individual). You might want to consider this type of policy if you want your payout to retain its same real-terms value.