What is Level Term Life Insurance?

Find out if this policy might be right for you.

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Making the decision to get life insurance can be daunting. It’s important to understand your options, including what type of policy to get. Level term life insurance is one of those options.

Level term life insurance offers some unique advantages for both families and individuals, providing financial protection for a period of time for a fixed premium—providing more affordability than other types of life insurance. 

In this article, we’ll break down everything you need to know about level term life insurance.

What is level term life insurance, and how does it work?

Level term life insurance is an accessible and affordable way for most people to financially protect their loved ones in the event of a tragedy. 

It offers temporary protection for a fixed amount of time—the “term”—with a fixed premium rate for that period of time. Most term life policies last between 10 and 30 years, and payments won’t go up or down during that time. 

Your life insurance beneficiary (or beneficiaries) will receive a generally tax-free, lump-sum death benefit from your life insurance company if you pass away during the insured period. Once the term is up, your policy expires unless you choose to extend or convert your policy into a different one.  

Term life insurance is a popular option among those who are looking to provide peace of mind but don’t want overly complicated policies. It’s also easy to sign up for, with less extensive underwriting. 

If you’re interested in Lemonade’s term life offering, you can start the digital application process by clicking on the button below—there’s no medical exam required.

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The benefits & drawbacks of level term life insurance

Level term life insurance is a simple and affordable way to take care of any immediate financial obligations after your passing, such as medical bills and funeral fees, as well as any longer-term liabilities, like mortgages and debts. 

This type of life insurance is one of the most affordable. It’s very easy to manage and understand, without complicated stipulations or added fees. 

Because level term policies have level premiums that won’t change over the course of your life insurance coverage, it’s fairly easy to plan ahead and budget for.  

The main drawback to these types of policies is that coverage expires at the end of the term. While some policies allow you to automatically renew your policy, your premiums may increase. We have a guide to your options for when your policy expires here. 

Unlike permanent life policies, term life insurance policies don’t come with a savings component, or a cash value that grows over the life of the policy. This makes level term life insurance policies not an ideal option for building wealth. 

Should you get level term life insurance?

If you are looking for a reliable form of financial protection for your family, level term life insurance is definitely worth considering. 

As we mentioned before, level term life insurance is one of the most affordable policies out there. The cost will depend on a variety of factors, including your age and health, the type of coverage, and how long your policy term is. But generally, you can expect to pay a few hundred dollars per year for term coverage. 

When you purchase a level term life insurance policy, some insurers will allow you to customize the policy to your specific needs with riders, which are optional benefits that provide additional coverage and financial protection (for an added price). Rider options might include things like  

  • Waiver of premium, which yields your premium payments in certain circumstances, such as disability or becoming unemployed.
  • Term conversion riders allow you to convert your existing term policy into a permanent policy.
  • Accelerated death riders provide a premature benefit if you’re diagnosed with a terminal illness. 
  • Guaranteed renewability clauses transform your policy into a renewable term policy, allowing you to renew your policy, regardless of your health and age. Keep in mind that your premiums may increase at the end of your term. 

Before you buy, it’s important to understand all of the different features that are available among level policies such as convertibility options, rate guarantees, and living benefit riders, so that you can find the plan that best fits your needs. 

Other types of life insurance 

Level term life insurance is right for most people, but isn’t the best option for everyone. Other types of life insurance include:

  • Decreasing term life insurance is a type of term life insurance product that provides a decreasing amount of coverage over a set period of time, with decreasing premiums. However, the death benefit also decreases over that period.
  • Whole life insurance provides permanent coverage until the policyholder dies, as long as you keep paying your premiums. A whole life policy includes other benefits such as a cash value feature that allows you to grow savings over time. 
  • Universal life insurance is a type of permanent life insurance that offers the flexibility to adjust your premiums and death benefit, giving you more control over their policy. 
  • Group term life insurance is offered by your employers, providing a set coverage amount for a set period of time (typically one year). Your employer pays the premiums, and you lose coverage if you switch jobs. 

For many individuals and families, level term life insurance is their most affordable and reliable life insurance option. 

By carefully researching your options and weighing the costs and benefits, you can find a policy that offers both value and peace of mind. No matter what type of life insurance you decide on, having the right coverage in place can help ensure that your loved ones are protected after you’re gone. 

Get Term Life


Please note: Lemonade articles and other editorial content are meant for educational purposes only, and should not be relied upon instead of professional legal, insurance or financial advice. The content of these educational articles does not alter the terms, conditions, exclusions, or limitations of policies issued by Lemonade, which differ according to your state of residence. While we regularly review previously published content to ensure it is accurate and up-to-date, there may be instances in which legal conditions or policy details have changed since publication. Any hypothetical examples used in Lemonade editorial content are purely expositional. Hypothetical examples do not alter or bind Lemonade to any application of your insurance policy to the particular facts and circumstances of any actual claim.