How your premium is structured can change the lifetime cost of your insurance by tens of thousands of dollars. There are two main types.
Stepped premiums
Recalculated each year based on your age. They start cheap and rise every year — often steeply once you’re in your 50s and 60s. Great if you only need cover for a few years; painful if you hold it long term.
Level premiums
Based on your age when you start and held far more stable (they still move with indexation and any repricing). More expensive in the early years, but they don’t climb with age — so over a long horizon they usually work out cheaper overall.
The right choice depends on how long you’ll hold the cover, your budget now, and whether you’d rather pay less today or less over a lifetime.
Frequently asked questions
Are level premiums really cheaper?
Over a long horizon, usually yes. They cost more early but don’t rise with age, so they typically become cheaper than stepped once you’ve held the cover for around 10-15 years.
Do level premiums ever increase?
They don’t rise with your age, but they can still move with indexation (to keep your cover keeping pace with inflation) and if the insurer reprices a product across the board.
Which should I choose?
Stepped suits short-term needs and a tight budget now; level suits long-term cover where you want to avoid steep rises later. It comes down to how long you’ll hold the policy.
Not sure which fund is right for you?
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