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Structuring your premiums to suit your needs

By David Drillien, Executive Manager Portfolio Management

When you take out a new life insurance policy, it’s important to be confident that you can afford the cover for as long as you need it. You also want to get the cover you need in the most cost-effective way.

It’s a good idea to make sure that you’ve structured your premiums in a way that suits you.

Asteron Life offers two different premium structures

Level Premiums
Level premiums begin higher, but your premiums are locked so they don't increase with age unless you change your cover.

Stepped premiums
Stepped premiums start lower, but increase each year based on your age.

The best soution might be a combination of both types of premium.

Both structures have different benefits 

At first glance, it might seem like level premiums are the obvious choice. But both structures have different benefits.  

An adviser will be able to help you assess your needs, show you how your personal premiums will change over time, and help you choose a structure – or a combination of both – that suits you.

Why level premiums?

Level premiums may start higher but they don’t change over time unless you change your cover. 

If you need to keep your insurance for a long time, or you need certainty in your budget, level premiums might suit you better.

Why stepped premiums?

Stepped premiums may start lower and sometimes take a while to increase, so if you don’t need to keep your insurance for a long time or your need for insurance might reduce, they can be a better option.

For example, you might want cover while your kids are young or at that start of your mortgage. But by the time your premiums start to rise steeply, you might need less cover because you have paid off your debt or your kids could be grown up. 

The important thing is to choose what’s right for you

When you take out life insurance, it’s usually because you want to protect the lifestyle you’ve worked hard to create, and it’s important that you can maintain your cover for as long as you need it.

It’s not always easy to figure out, but a financial adviser will be able to help you understand your risks and choose a structure that works for you.

If you want to check what premium structure you have, change your structure or see what each premium type would look like for you, speak to your insurance adviser.

If you don’t have an adviser, we can help you find one.

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The information in this article has been compiled from various sources and is intended to be factual information only. It is not personal advice and any description of an insurance product or service is not a complete description of all the terms and conditions applicable to the particular insurance product or service. You should consult a qualified adviser for advice on whether the information in this article is suitable for your personal situation and needs. While we take reasonable steps to ensure that the information contained in this article is accurate and up-to-date, it is subject to change without notice. Asteron Life Limited and its related companies does/do not accept any responsibility or liability in connection with your use of or reliance on this article.