Level term life insurance is a policy that lasts a set term — usually between 10 and 30 years — and comes with a level death benefit and level premiums that stay the same for the entire time the policy is in effect. This means you’ll know exactly how much your payments are and when you’ll have to make them, allowing you to budget accordingly. You’ll also know how much money your loved ones will receive when you die, giving you peace of mind and helping you plan for the future.
Level term can be a great option if you’re looking to buy life insurance coverage for the first time. According to LIMRA’s 2023 Insurance Barometer Study, 30% of all adults in the U.S. need life insurance and don’t have any type of policy yet. [1]
Level term life is predictable and affordable, which makes it one of the most popular types of life insurance.
How does level term life insurance work?
The main difference between level term and other types of term options is that its premiums and death benefit stay the same for the duration of the policy.
Other than that, level term life insurance works like other term life insurance policies.
How much does level term life insurance cost?
The cost of level term life insurance largely depends on your age, gender, overall health profile, and lifestyle habits. In general, the younger and healthier you are, the lower your rates will be.
A 30-year-old female in good health who doesn’t smoke can expect to pay $23 per month for a 20-year level term life insurance policy with a $500,000 payout. A 30-year-old male with a similar profile can expect to pay $29 per month for the same coverage.
Average 20-year level term life insurance rates
Age | Gender | $250,000 coverage amount | $500,000 coverage amount | $1 million coverage amount |
|---|---|---|---|---|
20 | Female | $15 | $23 | $34 |
Male | $19 | $29 | $48 | |
30 | Female | $15 | $23 | $37 |
Male | $18 | $29 | $49 | |
40 | Female | $22 | $35 | $61 |
Male | $25 | $43 | $75 | |
50 | Female | $44 | $78 | $139 |
Male | $57 | $102 | $188 | |
60 | Female | $108 | $194 | $355 |
Male | $149 | $268 | $500 |
Methodology: Average monthly rates are calculated for male and female non-smokers in a Preferred health classification obtaining a 20-year $250,000, $500,000, or $1,000,000 term life insurance policy. Life insurance averages are based on a composite of policies offered by Policygenius from Brighthouse Financial, Corebridge Financial, Foresters Financial, Legal & General America, Lincoln Financial, Mutual of Omaha, Pacific Life, Protective, Prudential, Symetra, and Transamerica, and the Policygenius Life Insurance Price Index, which uses real-time data from leading life insurance companies to determine pricing trends. Rates may vary by insurer, term, coverage amount, health class, and state. Not all policies are available in all states. Rate illustration valid as of 09/01/2024.
Learn more about life insurance rates
What are the pros & cons of level term life insurance?
Pros
It’s the cheapest form of life insurance for most people. Level term life is much more affordable than a comparable whole life insurance policy.
It’s easy to manage. Level term insurance is low-maintenance — you just have to continue making premium payments on time.
It allows you to budget and plan for the future. You can easily factor your life insurance into your budget because the premiums never change. You can plan for the future just as easily because you know exactly how much money your loved ones will receive in the event of your absence.
Cons
It expires. If you reach the end of your policy and realize you still need coverage, you may need to get a new policy at a higher cost. Life insurance gets more expensive to buy as you age due to increased insurance risk, so your replacement policy will be more expensive.
Your rate is locked in. If your health improves while your policy is active, you could end up paying more than you need. This is true for people who quit smoking or who have a health condition that resolves. In these cases, you’ll usually have to go through a new application process to get a better rate.
What happens at the end of a level term life insurance policy?
If you still need coverage by the time your level term life policy nears the expiration date, you have a few options.
Renew your existing term policy. Most level term life insurance policies come with the option to renew coverage on an annual basis after the initial term ends. The cost of your policy will be based on your current age and it’ll increase every year. This could be a good option if you only need to extend your coverage for one or two years — otherwise, it can get expensive pretty quickly.
Convert your policy. Many level term life policies come with a conversion rider that allows you to convert them into permanent life insurance. Consider this option only if you realize you’ll need to extend coverage indefinitely — premiums for permanent life insurance are much higher than they are for term life insurance.
Apply for a new level term life policy. This could be the most affordable option available to you to extend your coverage after your initial level term life policy expires. Your premiums will be based on your current age, and you’ll have to go through underwriting again, which is the process insurers use to assess your insurance risk and set your rates. It’s possible that you’ll have to take a new medical exam, too.
Learn more about how life insurance works
What are the differences between level term & whole life insurance?
Whole life insurance is one of the most popular types of permanent life insurance, so you might be trying to decide between whole and level term life. These are the main differences between both.
Level term life insurance is one of the cheapest coverage options on the market because it offers basic protection in the form of death benefit and only lasts for a set period of time. At the end of the term, it expires.
Whole life insurance, on the other hand, is significantly more expensive than level term life because it doesn’t expire and comes with a cash value feature. This is an investment-like separate account that grows over time and that you can borrow from while you’re still alive.
If your main goal is to provide a financial safety net for your loved ones in the event of your death, level term life insurance is your best bet.
If you have a high net worth and are looking for ways to complement your investment or estate planning portfolio, or if you have dependents that require lifelong care, whole life can be a better fit for you.
Features | Term life insurance | Whole life insurance |
|---|---|---|
Permanent coverage | No — maximum of 40 years | Yes |
Cost* ($500,000 coverage amount) | $26/month for a 20-year term | $451/month |
Guaranteed death benefit payout | Yes | Yes |
Guaranteed cash value | No | Yes |
Premium cost stays fixed | Yes, in most cases | Yes, in most cases |
Pays annual dividends | No | Yes, in some cases |
*Methodology: Average monthly term life insurance rate is for male and female non-smokers with a Preferred health classification obtaining a 20-year, $500,000 policy. Term life insurance averages are based on a composite of policies offered by Policygenius from Brighthouse Financial, Corebridge Financial, Foresters Financial, Legal & General America, Lincoln Financial, Mutual of Omaha, Pacific Life, Protective, Prudential, Symetra, and Transamerica, and the Policygenius Life Insurance Price Index, which uses real-time data from leading life insurance companies to determine pricing trends. Average monthly whole life insurance rate is calculated for non-smokers in a Preferred health classification, obtaining a whole life insurance policy paid up at age 100 offered by Policygenius from MassMutual. Rates may vary by insurer, term, coverage amount, health class, and state. Not all policies are available in all states. Rate illustration valid as of 10/01/2024.
Learn more about the differences between term and whole life insurance
Alternatives to level term life insurance
Level term is a great life insurance option for most people, but depending on your coverage needs and personal situation, it might not be the best fit for you. These policy alternatives are worth considering.
Annual renewable term life insurance has a term of only one year and can be renewed annually. Annual renewable term life premiums are initially lower than level term life premiums, but prices go up each time you renew. This can be a good option if you, for example, have just quit smoking and need to wait two or three years to apply for a level term policy and be eligible for a lower rate.
Decreasing term life insurance is a type of term life insurance that can be used to pay off debt, like a mortgage. With a decreasing term life policy, your death benefit payout will decrease over time, but your payments will stay the same. Decreasing term life policies like mortgage protection insurance usually pay out to your lender, so if you’re looking for a policy that will pay out to your loved ones, this is not a good fit for you.
Increasing term life insurance has a payout that increases as time goes on. Increasing term life insurance policies can help you hedge against inflation or plan financially for future children. On the other hand, you’ll pay more upfront for less coverage with an increasing term life policy than with a level term life policy.
If you’re not sure which type of policy is best for you, working with an independent broker can help. At Policygenius, our experts are licensed in all 50 states and can walk you through the entire life insurance buying process while offering transparent, unbiased advice.
How to buy level term life insurance
Once you’ve decided that level term is right for you, the next step is to purchase your policy. Here’s how to do it.
