Level term life assurance is the cheapest method to ensure a life. The premiums – the money you pay each month – remain the same throughout and if you survive until the policy runs out you won’t get any payout. This type of contract only provides cover upon death and there is no surrender value (you won’t get any money back if you cancel at any time). If you stop paying your monthly premiums your cover stops immediately.
Premiums are based on your personal circumstances but the main areas for consideration by an insurer are your age and state of health. The older you are and if you smoke the higher the premium will be. Similarly if you have or had a serious illness the insurer may charge you more or in some cases be unwilling to cover you at all. And the higher the level of cover you want and longer you need it, the more it will cost you.
The limitations
Level term assurance is cheap cover on your life which will benefit your family or your business, but there are limitations to it.
As it is fixed term, there is no flexibility and you can’t increase the cover details or extend the term i.e the length of you policy. So if you become ill near the end of your policy you might not be able to get further cover. But you can sometimes buy an add-on called a renewable option which means that you can extend the term of the cover but that can cost more.
Level term assurance is by no means an investment opportunity and it doesn’t take inflation rates into account at all.

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