Are “Level Premiums” a Life Cover Saver?

Life cover is an essential for many of us but once you’ve found the policy that’s right for you, keeping the premiums affordable in the long-term can be a challenge.  Simply hoping for the best doesn’t provide great security!

An option which you may like to consider is “level life cover premiums”.

What are level premiums?

Most life insurance premiums increase with age so that in your early years it’s quite affordable but as you age, the cost can become prohibitive.  That’s why so many people cancel their life cover in later life, just at a time when they are more likely to need it.

Level life cover premiums solve this problem as you pay a fixed premium until either age 65 or 80.* While you are young you will pay a bit more but later on, your actual premium will be significantly less than an age related premium.

*Premiums may still change if the insurance provider changes its underlying premium rates or if you choose to have your benefits linked to the Consumer Price Index (CPI). Once you reach 65 or 80 your premiums will then increase with your age.

Why Level Premiums Could Be A Great Option For You

  • Your premiums remain the same every year.
    This makes budgeting a lot easier.
  • Your life cover remains affordable.
    You won’t have to face cancelling or drastically reducing your cover later on.
  • It’s quick and easy to change to a level premium.
    If you keep your level of cover the same, you don’t need to undergo any medical or financial underwriting.

See How Much You Could Save Long-Term

Below is an example of the annual premium for Jody, a 40 yr old with a $200,000 Sovereign Life Cover policy. You can see that initially Jody is paying a higher premium but after she reaches 52yrs of age she starts to pay a lot less.

When you look at what Jody will pay over the lifetime of her policy (see below) it’s clear that level premiums are financially the best option should she wish to keep her policy after 60yrs of age.

This option is not for everyone. As with any financial plan, your insurances and payment methods need to be aligned with your overall financial goals. As your life changes you can expect your insurance needs to change too so it’s advisable to keep in contact with your financial adviser and conduct periodic reviews. That way you can be sure to stay on track building the healthy financial life you want.