Life Insurance PremiumsFebruary 6th, 2012 | Posted by in Articles
Life Insurance premiums and the options in which they can be structured can be somewhat confusing, and you may have the inevitable task of choosing between two types of premium structure Stepped and Level.
Stepped premiums are based on your age at the time you take out your insurance policy and are recalculated each year at your policy anniversary generally becoming more expensive as you get older. Premiums are usually relatively cheap at younger ages and will increase significantly over time.
Level premiums are calculated on your age at the commencement of your insurance policy and will be higher than stepped premiums, but will generally remain consistently level for the period that you remain insured.
There are advantages of each depending on the age you have taken out your insurance and the length of time you keep your policy. Stepped premiums are considered more appropriate for the short term and are a more cost effective option, unfortunately the older you get the higher your insurance premiums become, many policy holders may decide to reduce their benefits or may even cancel their cover.
Level premiums may seem initially unattractive because of their higher premiums compared to stepped premiums, but for the policy holder who maintains this type of policy for a long period of time generally 10 to 12 years there remains some certainty and affordability which stepped premiums do not offer.
When considering Life Insurance premiums you may consider such factors as your age when you start your policy and for how long you intend to keep it.This material is not intended to constitute personal advice, and must not be relied on as such. This information has been prepared without taking into account your objectives, financial circumstances or needs. Before making a decision based on this material, you should consider the appropriateness of this material having regard to your own objectives financial circumstances and needs. You should consider obtaining independent advice before making any decision.
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