Level term life insurance is where the insurer pays out a fixed lump sum if the policy holder dies within the term agreed.

This type of cover offers security that your beneficiaries can receive a specific sum, which can help you all plan for a time when you're no longer around.

There are any number of reasons you might want to cover a specific amount of money - debts, interest-only mortgages, continuation of life as your loved ones know it or simply as a gift to the next generation.

There are a number of reasons you might choose level term life cover over decreasing or increasing term policies.

This is primarily designed to provide peace of mind. Whether that’s because you can be confident in the knowledge that you have provided for your loved ones after death or you want to contribute to their financial security after you are no longer, it may make everything feel that little bit more secure.

If you have a large estate and you know that your loved ones can expect a sizeable bill, then you might want to consider level life cover as a way for them to meet this obligation without reaching into their personal coffers.

People also take out level term insurance to prevent disruption to their loved ones’ lives should the policy holder die. For example, if you have a child who has recently enrolled in a fee-paying school, a level cover policy may ensure that they can remain in their preferred environment if you were no longer around.

In this particular example, level term cover may be more appropriate than increasing term cover because the period of time your child is in school won’t be significantly impacted by the effects of inflation.

However, if you want your policy to last a long period of time, then taking inflation into account with an increasing term policy might be a sensible option.

If you have personal debts, you might want to consider decreasing term life insurance, as this is more specifically designed to repay ongoing financial commitments. However, your beneficiaries can use your level term pay-out to clear outstanding debts if you have them.