Level Premium Life Insurance (Health Care) Law and Legal Definition

Level premium life insurance a type of life insurance where the amount of the premium remains the same for the duration of the contract and does not change every year. The amount paid as premium on this type of policy is greater than the actual cost of protection when the insurance is first received. And, as the policy matures the amount of premium becomes less than the actual cost. The reason for the decrease in the premium amount as the policy matures is that the policy builds up a reserve as the premiums earn interest over the years. In addition, the overpayments made in the initial period together with the interest that is to be earned, helps to set a balance on the underpayments of later years.