Term Life Insurance – Stepped or Level Premiums?

Term Life Insurance – Stepped or Level Premiums?

There are two things in life you can be certain of, death and taxes.  While you can’t avoid either, you can certainly minimize the financial impact in the event of your death.

No one likes to think about his or her mortality, but the fallout of not having life insurance can be doubly devastating on your family.  Ensuring your family’s financial security in a time of crisis can at least ease the financial stress left in your wake.

Term Life Insurance, otherwise known as simply life insurance, life cover or death cover basically pays an agreed lump sum of money upon death or terminal illness of the policy holder to their family or beneficiaries.

The lump sum payment from a term life insurance can be used to pay off outstanding debts and/or provide an income to your family or beneficiaries so that they can continue to maintain their lifestyle and achieve their financial goals in your absence.

You may think that term life insurance is a long term expense but you can make your insurance more affordable.

When purchasing your life insurance there are two ways you can pay your premium.  You can choose to pay a stepped premium that is calculated each year in line with your age.  Or you can choose to pay a level premium that is calculated based on your age when the cover commences.

Level premiums are consistent over time while stepped premiums increase significantly as you get older.

Opting for level premiums earlier can considerably reduce the long term cost of your life insurance.

  • Level premiums are lower if you take the cover at a younger age.
  • Level premiums make budgeting easier as you know what it will cost.
  • Level premiums become more affordable in your later years as the chance of making a claim increases.

Don’t risk an uncertain future for your loved ones, term life insurance is affordable and gives you peace of mind knowing that your family’s future is financially secure in the event of your untimely death.

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