Stepped vs Level

Updated: Feb 3

Are you sick of your policy increasing in price every year? Wondered if there is a better way? A Level Premium policy might be the one for you!


The most common type of policy is on a Stepped Premium, that’s the one that increases every year. So why would you want a Level Premium policy?


A Level Premium policy is where you pay for a fixed price over a period of time. This means that your cover stays the same price each year rather than increasing as you get older.


Here’s the math.


A 35-year-old female takes out $500,000 life cover today on a Level policy to 80 years old.

The cost of the cover is $39 p/fortnight. This price stays the same until she is 80.


If she was to instead take a Stepped policy of $500,000 life cover, the cost would be $14 p/fortnight, but that $14 will increase each year.


By choosing a Level policy today, forecasting predicts that she would spend around$263,368 less in insurance compared to if she kept $500,000 on a stepped policy until she was 80!


This is because by Levelling she has locked in her price of cover with the insurer and is therefore able to reap the benefit over time.


Projections of the premium suggest that when the 35-year-old is 65, this $500,000 cover will be costing her 192.64 p/fortnight if the policy is on a Stepped premium compared to her locked in Level rate of $39 p/fortnight.


Not only do we save thousands in the long run, but the cover also stays affordable later in life.


This means we can keep our cover longer and when we are statistically more likely to need it.

For advice that matters in future proofing your insurance, I’m ready to chat when you are.

The information contained in this article is not personalised financial advice, this is purely information based and should be interpreted as such.

Published 01/02/21 - Josh