Level term mortgage protection

How it works

• The death benefit stays constant for the term
• The premium stays constant, if it's guaranteed level
• The gap between benefit and loan balance widens each year
• Your beneficiary receives the full amount regardless of the balance

The gap is the useful part

By year fifteen of a thirty-year loan, a level policy pays substantially more than the outstanding balance. That surplus goes to your family, and there is no shortage of things it's needed for.

Property taxes and insurance continue after a mortgage is cleared. So do childcare, living costs, and the general expense of a household that has lost an income.

Compared with decreasing coverage

Decreasing term costs less because the average amount at risk is lower. The saving is real, and often smaller than people expect once both are quoted at the same starting amount.

Decreasing coverage also tracks a schedule fixed at issue, which drifts from the actual balance if you refinance or the loan doesn't amortise as projected. Level coverage has nothing to drift from.

What to check

• Is the premium guaranteed level for the full term, or only current?
• Is there a conversion privilege, and when does it expire?
• Who is the beneficiary — you should be naming them
• Does the policy survive refinancing, moving, or paying the loan off early?
• What are the renewal terms after the level period?

It's just term life insurance

A level term mortgage protection policy is a level term life policy sized around a mortgage. Compare it directly against ordinary term quotes for the same amount and length — they're the same shape of product and the comparison is apples to apples.