A payout that keeps its size
With level term cover you agree two numbers at the start: how much the policy pays and how many years it lasts. If you die at any point in those years, the insurer pays that exact sum to the people or trust you named. Year two or year twenty makes no difference to the amount.
That predictability is why level term is the plainest form of life cover. You know what your family would get, and you can plan around it. The monthly premium usually stays put for the whole policy as well, so the cost on your bank statement in the last year matches the first.
Needs that suit a fixed sum
Level cover fits any debt or goal where the amount you need will not fall. An interest-only mortgage is the classic example, because you owe the full loan until the final day. It also fits a family that wants a pot to replace several years of income, pay for school fees or leave a gift for a child.
Some households use level term alongside a decreasing policy. The decreasing part tracks the repayment mortgage while the level part gives your family money to live on. Splitting the cover this way often costs less than one large level policy for everything.
- Interest-only or part-and-part mortgages
- Replacing income for a set number of years
- Covering childcare or education costs
- Leaving a fixed legacy to children or grandchildren
Inflation and the fixed sum
A fixed sum has one weakness. Prices tend to rise, so the same payout buys less in twenty years than it would today. For a debt that is fixed in pounds, that does not matter. For family living costs over a long term, it can leave a gap.
You can deal with this by choosing a slightly larger sum at the start, by picking increasing cover instead, or by reviewing your policy every few years and topping it up if you need to. We will talk through which route fits your plans when we make our recommendation.
Choosing the term
Pick an end date tied to something real. The last mortgage payment, the year your youngest finishes education or the year you expect to retire are all common choices. A longer term costs more, because the insurer covers you into older ages where claims are more likely.
If your needs end at different times, two smaller policies with different terms can work out cheaper than one long policy. A short policy might cover the years while children are at home, and a longer one might run to the end of the mortgage.
How Hi Tomorrow sets up level cover
We start with what the money would need to do, then work back to a sum and term. We check whether level cover is the right shape at all, or whether part of your need would be met more cheaply by decreasing cover or family income benefit.
Then we compare the insurers on our panel for your age, health and job, help you with the application and offer to set up a trust so the payout can reach your family without waiting for probate. Our advice on personal cover carries no fee.