Stepped VS Level Premium

When you take out insurance there are generally two ways to structure the premiums you pay.

The first and most common is a stepped premium that increases in cost each year as you get older

The second is known as level premium that costs more in the early years but could save you a small fortune over the long term Because stepped premiums seem cheap when you are young it seems attractive, but it could be a false economy and by the time you reach middle age the premiums will start to increase dramatically.

The benefit with level premiums is that in the later years when you need the cover most you should still be able to afford the premiums. The only time that level premiums will go up is if you increase your insured benefit or the insurance company is forced to put up their rates.

The decision is really down to your age when you start the policy and how long you intend to keep it for. A stepped vs Level premium comparison will show the potential savings.

You will see a link on the right that will give you some examples of stepped vs level premium.