Stepped and Level premiums

This is what I say…

Stepped Premiums are calculated on one’s age. This means insurance premiums start off cheap, but increase with our ever increasing age.

Level Premiums on the other hand are calculated on an average premium. This means you may pay a little more in the beginning i.e. when you’re younger, but you pay much less (relative to stepped premiums) when you get older.

When first taking out an insurance premium, we’re easily misled into thinking the “cheaper” Stepped premium option is better. However, when we take a closer look, we find the Level premium provides the greatest long term saving. In many cases, one can save you up to 50% of the total amount of insurance cover paid over your life time.

When one reviews previously lodged insurance claims, we learn insurance cover is most needed/used between the ages 40 to 55. Sadly, Stepped premiums are commonly too expensive at this age. By taking Level cover, your insurance premiums remain a constant and reasonable rate. This means one can still afford insurance when needed most. Check some case studies on Stepped vs Level Insurance Premiums.

It is my view for insurance you will need to keep at the same level or higher for your working life, most notably Trauma and income protection, Level Premium in general are recommended. In cases where insurance may not be required for you entire working life, it is possible stepped premiums may be beneficial. It is necessary to judge on a case by case basis.

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Author; Alex McKenzie Categories: Future Financial Services Blog

About the Author

Alex McKenzie

Alex McKenzie

Owner at Future Financial Services


  • Paraplanner at Zammit Partners Investments
  • Unit Trust Administrator at Colonial First State


  • University of Western Sydney
  • Penrith High


As a Financial Planner I help people to achieve what they would like in life. This involves helping you to identify the things in life they would like , developing plans to help achieve them and strategies to protect what you already have. We do this by providing Financial Advice to guide you through your life stages.

The financial planning process involves determining a clients current situation and financial objectives and tailoring strategies to assist in best achieving those objectives.

I am an expert in superannuation, investments and insurance, these are tools we use to help you achieve your goals.

I aim to use my knowledge of superannuation, taxation and Centrelink to efficiently use your assets and income to achieve your financial goals.

Retirement and pre-retirement planning, wealth creation, asset protection, insurance planning and estate planning are all areas of advice that I provide.

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