Insurance is easy to avoid.  Its value is only realised when it is needed.

Consequently insurance becomes more of an issue with age, when families are started, when property is acquired, when debt increases and during ill health.

Life insurance policies are typically purchased by people in their mid-to-late thirties and the policies have a lifespan of about 7 to 8 years.  However, most claims occur when people are in their 50’s and 60’s.

With the trend to starting families later, larger amounts of debt and longer financial responsibilities, the need for long-term insurance has increased.  Insurance companies have reacted to this trend by offering an option of level premiums.

A stepped premium, for the same cover, increases over time as it is based on current age.  A stepped premium is appealing as the cheaper alternative at the outset, but quickly becomes more expensive as time marches on.

This simple diagram shows the effect of a stepped vs level premium:

As can be seen the “cross-over” point is about 47 years of age and then the stepped premium rises sharply.

A level premium may incur greater expense in the earlier years but the benefits are clearly demonstrable later on.

Talk with your insurance advisor regarding long-term insurance needs.  If you need help with finding a suitable advisor please contact our office and we can assist you.