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Level term assurance

Great type of cover for anyone with an interest only mortgage.

Level term assurance is life cover that stays level throughout the term of the plan.

The term element in the name means that it can be taken out for a specified period of time and in the case of a mortgage this would coincide with the term of the debt ie the final repayment date for example 25 years.

This type of cover is best suited to interest only mortgages. As the size of the debt stays constant through the term the level of life insurance cover needs to remain constant also. This can be seen from the diagram below of an interest only mortgage:-

Level term assurance can also be used to cover capital repayment mortgages, even though it is predominantly used with interest only mortgages.

It should be noted that should you have an interest only mortgage mortgage protection insurance or decreasing term assurance is wholly unsuitable as this cover will reduce throughout the term of the debt leaving you grossly underinsured. So in the case of an interest only mortgage level term assurance is the only suitable option to insure the mortgage.

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