"An investment in knowledge pays the best interest"
Benjamin Franklin
LEVEL ADVICE
The benefits of seeking my advice on premiums
There is a beneficial way to set how your premiums are paid for your insurance. Most policies are issued with stepped premiums ... but there is another effective system that gives the same cover but in the long-term delivers substantial savings - these are known as level premiums. How do you know which premium is right for you?
Level Premiums
With level premiums, you pay more in the beginning, but the premium costs average out over time so that you can end up saving money.
Benefits
Level premiums ensure:
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Security – you know in advance what your premiums will be so you can guarantee you can afford it in the future.
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A fixed price – the premium doesn’t increase annually and remains the same till the policy ends (except for modest yearly increases relating to inflation)
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The flexibility to increase your cover (and your premium) if you choose
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Long-term cost saving as your premiums stay the same, instead of rising steadily as stepped premiums do.
Disadvantages
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A higher cost at the beginning of the policy (but this price stays fixed for the length of the policy, unlike stepped premiums).
Should I choose level premiums?
Level premiums are ideal if you plan to keep your Insurance policy long-term. If you’ve just taken out a mortgage and plan to repay it over a few decades, you may want to ensure you’re covered by Life Insurance for the same length of time.
Level premiums also suit you if you’re young and look at getting a head start on a long-term policy. While you may pay more initially, you could end up saving a substantial amount over time.
Stepped premiums
Stepped premiums are the most common way to pay Insurance premiums. They’re calculated on your age, with premiums generally increasing with your age. Premiums are typically higher the older you get, since you’re considered more likely to fall ill or be seriously injured.
Stepped premiums are recalculated annually at the policy anniversary. While they do generally rise as your risks rise, they can sometimes drop if your circumstances are deemed less hazardous.
Benefits
Stepped premiums ensure:
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A cheaper rate at the beginning of a policy, so more affordability in the short-term.
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You are only paying for the level of risk associated with your current age.
Disadvantages
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Your premium will rise substantially the older you get.
Should I choose stepped premiums?
Since stepped premiums are much more economical than level premiums at the beginning of a policy, they are good if you’re looking at keeping a short-term policy just to pay off your loans or debts.
Similarly, if you’re a young family struggling to make ends, a stepped premium helps ease yourself into a Life Insurance policy. After all, it’s better to choose a cheaper premium than to forego Life Insurance altogether because of unaffordability. Once your finances are freer, you can increase your cover as you wish.
There's Benefits in Seeking My Advice
Getting advice on what the right premium structure you use ensures that you’re getting the best Insurance policy for your circumstances. Contact me for invaluable advice.