If you’re after a policy that’ll pay out exactly how much you want, whether you pass away in year 1 or year 21, then level term cover could be right for you. They might be a little pricier than decreasing term policies, but the peace of mind they give can often justify the cost.
How much is level term life insurance?
The price you pay for your policy depends on a few things.
These can include:
- The amount of cover you take out
- The length of your cover period
- Your age
- Your state of health and medical history
- Your lifestyle - for example your weight, activity levels, whether you smoke and how much you drink
The younger and healthier you are, the cheaper your cover will be.
Below are some examples of what you might pay for your cover.
For a better idea of what you’ll pay, get a quote today.
1. Based on £100,000 of level term cover for 20 years, non smoking male with no underlying health conditions (Feb 2022).
Is level term life insurance taxable?
The pay-out from your level term policy is only taxable if it pushes the total value of your estate to more than £325,000.
Your estate is the sum total of everything you leave behind after you’re gone. If this exceeds £325,000, you’ll pay 40% tax on anything above that threshold. If it’s under £325,000 you pay no tax.
If you’re worried your pay-out may push your estate far above the £325,000 cut off, think about writing your life insurance in trust.
In a trust your pay-out is kept separate to your estate, meaning you won’t pay tax on it. This can be useful for ensuring your loved ones get your whole pay-out, rather than just part of it.
Buy life insurance and choose a £75 gift card with Confused.com Rewards*
*Get reward after 6 months of your policy being active. Excludes over 50s guaranteed acceptance policies and can’t be used alongside cashback offers. T&Cs apply. **Restrictions apply, see https://www.amazon.co.uk/gc-legal
What our life insurance expert says
Need more help?
Decreasing life insurance is an alternative to level term life insurance cover.
Level term life insurance pays out the same amount whether you die in year 1 or year 25 of your policy. This makes them good for ensuring you leave enough behind to support your loved ones should you pass away.
Decreasing term life insurance policies pay out less the further into your term you get. They tend to be taken out to cover mortgages, with the pay-out amount declining over time in line with the policyholder’s outstanding mortgage debt.
If you took out £100,000 of cover and died in year 5 of your term, your loved ones might get £95,000 as a pay-out. If you died in year 25, they might get £10,000. Decreasing term life insurance tends to be cheaper than level term life insurance.
If you only want it to cover your mortgage, then decreasing term may be for you. But if you want to cover a bit more and have a fixed lump sum, consider level term life insurance.
If you outlive the term of your policy, your cover ends. You normally won’t get back what you’ve paid. But life insurance is designed to work as a safety net – your payments guarantee that if you were to die during the policy term, your family would be supported. So, surviving to the end of your term can be a win-win situation, and the payments are often justified by the peace of mind you get from having that safety net in place.
Yes, level term cover is available as a joint policy. Here you’d cover two lives on one easy-to-manage policy. Joint policies tend to be cheaper than taking out two separate life insurance policies, so they’re a useful option for couples.To get a joint level term cover quote, simply select the joint option when you’re getting a quote.
Most level term life insurance policies will cover pre-existing conditions, but you may have to pay more if you have one. A pre-existing condition can be anything from asthma to heart disease. It’s worth checking the policy wording on pre-existing conditions before you buy.
Yes, critical illness cover is available as an add on with any level term life policy. For a slightly higher price per month, you could be eligible for a pay-out if you suffer a severe injury or become seriously unwell during your cover term. This is a handy way of increasing your safety net, helping to ensure that your family will be financially secure no matter what life throws at you.
Wondering why we ask all this? Find out in our guide on how life insurance premiums are calculated.
What are the different types of life insurance?
is individual cover that pays out when the policyholder dies.
pays out an amount that decreases over time, usually in line with your mortgage
pays out a lump sum if you're diagnosed with an illness covered by your policy
covers your bills if you're injured or ill and are unable to work. Short term policies and longer ones available
covers the cost of private medical care, helping you avoid NHS waiting lists to get the cover you need, quickly
Life insurance guides
Still confused about joint life insurance? Learn all you need to know here
Looking to avoid tax on your pay-out? Then writing it in trust may be for you
Need to update your policy? Here's some quick tips on how to do it
Find out how to review your policy to check who'll get your pay out