Are Level Life Insurance Premiums Guaranteed?

Published: July 28, 2013

We all tend to make the assumption that level life insurance premiums never increase. However, after a review of Australian life insurance policies, there is generally no guarantee that an insurer will not increase their level rates.

Many companies in Australia place a clause in their product disclosure statement outlining that in the event of a major life event, life insurance premiums may indeed increase. These life events include things like pandemic life threatening diseases. With this being the case, how can you be certain that your life cover can be maintained over the long term?

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Can level life insurance premiums really be guaranteed?

Yes, in a few cases they can. A select number of insurers guarantee that their level life insurance rates will not increase.

This statement is defined in varying degrees, with some companies being absolute in guaranteeing that their level premiums will not increase; while others state that their level premiums will not increase unless the government places taxes, duties or charges onto life insurance policies in general.

If you are in doubt, be sure to read the product disclosure statement or consult an insurance specialist.

What are level life insurance premiums?

Level premiums generally mean that your premiums remain the same until age 65. After this age, your premiums change to stepped style premiums. Stepped premiums are where your premiums increase as you grow older. This type of premium is far more common than level premiums as premiums may initially seem cheaper.

Are level life insurance premiums better than stepped premiums?

As with many risk products, it depends on your personal situation.

  • Level life insurance rates may be more financially advantageous if you are seeking a longer term protection strategy. Level premiums can also save you thousands of dollars over a long time period.
  • If you expect to hold a life insurance policy for a short time period, stepped may be for you.

Make sure your premium structure is best suited to your situation and competitively priced.

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