Level Term Assurance: Consistent Coverage

2007-03-08 10:33:40

( Insurance )



LUMP SUM PLAN

A level term assurance is an insurance plan that pays a one-time lump sum in the event of the policy holder’s death or diagnosis of a terminal illness. Another option in level term assurance is cash payout in case you have been diagnosed with a critical illness which has been particularly specified in your coverage plan.

The cash payout is a pre-agreed amount that remains unchanged throughout the plan term regardless of how early or late into the term it may be. If at any given point during the coverage you are stricken ill or die, the lump sum you receive will always be the same.

If you do a level term assurance and term life insurance comparison, you will see that their main point of difference is the element of time which greatly affects the latter. Short term insurance, as the name implies provides coverage for a specified period of time and the value of the insurance plan coverage usually changes as the years go by.

PLANNING YOUR WORTH

The value of level term assurance plan that you avail of will depend on your circumstances and concerns. You should purchase a level term assurance plan that covers your outstanding debts and obligations, with enough left over to tide your loved ones over for a couple of years. Moreover, depending on how young your children are, you may also want to set aside an amount that will be able to address their education and medical needs.

The shortest level term assurance that can be purchased is a 5-year plan, and the longest is a term that provides coverage for 40-years. A 20-year term life insurance is the most common plan that people avail of. You should take into consideration your age and health condition before purchasing a level term assurance plan to ensure that you do not avail of a plan that is too short or too long.


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