Close-up of a life insurance application with a pen on top

When it comes to life insurance, there’s no one-size-fits-it-all. Put otherwise, there exists no one cover that can take care of all your needs and risks. As such, the industry designed two main types of policies, the Whole of Life and term life insurance to diversify coverage options for different needs.

What are the different types of term life insurance policies?

Term life insurance policies are then further subdivided into two standard varieties – level term and decreasing term. We’ll dig deeper into and explain the benefits of taking out each option.

Ready? Let’s begin!

Level term life insurance policy

Level term life policy is one of the most straightforward and popular covers available on the market today. It can guarantee support for your loved ones financially (for a fixed period) if you pass away within the contract term.

There are many reasons why you might want to consider this policy. But the biggest of all is that it gives you peace of mind knowing that your family won’t remain in a financial dilemma after your demise. Your dependents can use the policy’s benefits to take care of their living expenses, pay household bills, plan for the children’s future education, cater for funeral costs, and more.

What are the benefits of taking out a level term policy?

Aside from giving you the much-needed, level term policy comes with several other advantages as follows.

Premiums are relatively lower

Level term life insurance premiums are among the least expensive among life insurance plans. However, it’s worth noting that factors such as age, lifestyle habits, and health can affect the amount of premiums payable.

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Takes care of temporary needs

If you need protection for around 10-20 years, level term life insurance is a suitable policy to consider for such needs. For example, if you want to protect your children while they’re under your custody until they become independent, this is the policy to go for.

Payout remains the same throughout

This is one of the reasons why many people prefer level term policy to other types of life insurance plans. The benefits payable remain constant no matter what you’re protecting with the policy.

For instance, if you’re using it to pay off a debt, as the amount keeps falling, you’ll still have enough pay-out that your family could use to finance other needs in the event of your demise.

Beneficiaries receive the proceeds without delay

Unless you name an estate as the beneficiary of the policy, your dependents can rest assured of receiving the proceeds in a timely manner. If you assign the policy’s benefits to the estate, the claim process may take a bit longer due to the administrative and probate processes involved.

Decreasing term life insurance

If you wish to protect your mortgage or other debts, such as car loans or student loans, decreasing term life insurance is the policy for you. It is a type of term life coverage which you take out for a set period known as “term.”

And as you keep paying the premiums, the amount of payout falls in correspondence with the contract term. This means that by the end of the period, it (the payout) shall have decreased to zero.

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Unlike other life policies that consider factors like age, health, and lifestyle when calculating the cost, decreasing term life only looks at the amount left on your mortgage amount. The cost of your cover will then be dependent on the outstanding amount and the length left on your mortgage.

What are the benefits of decreasing term life insurance?

Below are some key reasons you should consider going for a decreasing term life policy:

Affordable premiums

This policy is a lot cheaper than its level term counterpart. If you have a tight budget but would still love to protect your loved ones financially should anything happen, decreasing term life insurance has you covered.

Reliable mortgage protection

You may not have any dependents needing your financial protection, but that doesn’t stop you from acquiring a mortgage for your dream home. Taking out a decreasing term life policy provides the necessary protection you need for your prized asset. In any case, some lenders insist that you purchase this plan before they can grant you the mortgage.


Your most suitable type of term life insurance policy depends on your specific needs. If you’re looking for a policy that seeks to secure your family financially in the event you pass away within a specified period, level term life insurance is for you. On the other hand, if you’re looking for a policy that protects your long-term obligations including mortgage or student loans, consider taking out decreasing term life insurance.

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