Policy mechanics

Level Premium

A level premium is a payment that stays the same for the life of the policy or for a set period, such as a 20-year term. It does not rise as the insured gets older.

Why it matters

Level pricing helps families budget. Whole life and most final expense plans use level premiums for life. Term life uses them only during the term, and the cost can jump when the term ends. The first payment is higher than a young person's natural cost, because the carrier spreads the cost across later years. Check whether the plan is guaranteed level.

Source: iii.org

Read next, for familiesHow much does life insurance cost, and what drives the price?

Where we use this term

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