Pay The Right Way To Suit Your Needs: Asteron Life
It’s not widely known that there are two ways to pay for life cover, says Asteron Life’s Head of Life, Grant Willis. Choose the way to pay that suits your timeframe and your need.
18 October 2021
Content partnership Summer 2021
When you take out a new life insurance policy, you need 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.
So, it’s a good idea to make sure that you’ve structured your premiums in a way that suits you.
There are two premium structures commonly used in the insurance world – ‘level’ premiums and ‘stepped’ premiums.
Here’s a guide to the difference between the two ways of paying.
Level premiums may start out higher, but your premiums are locked in, so they won’t increase as you get older, unless you change your cover.
At first glance, it might seem like level premiums are the obvious choice. But, in fact, both structures have different benefits to suit different people.
Level premiums might suit you better if you need to keep your insurance for a long time, or you need certainty in your budget.
With level premiums, you’ll always know what you’re paying, over the time you have the policy.
Stepped premiums may start lower, but they’ll increase each year, based on your age.
Sometimes stepped premiums may take a while to increase, so if you don’t need to keep up your insurance for a long time, or your need for insurance might reduce, they might be a better option.
You might want cover while your kids are young, or at that start of your mortgage, to protect your partner and make sure the kids get a good education if the worst happens.
But by the time your premiums start to rise steeply, you might need less cover, because you’ve paid off your home loan, or your kids have grown up and are living independently.
Choose the one for you – or a mix
The important thing is to choose what’s right for you, whether that’s stepped, level or a combination. For example, the best solution for you might be to put half of your life insurance on stepped premiums and half on level.
It’s not always easy to figure out, but a financial adviser will be able to assess your needs and budget, show you how your personal premiums will change over time, and help you choose a structure – or a combination of both – that suits 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 keep up your cover for as long as you need it.
If you want to check what premium structure you have, change your structure, or see what each premium type would look like for you, have a chat to your financial adviser.
If you don’t have an adviser, your insurance company can help you find one. For more information about Asteron Life policies and payment options, go to www.asteronlife.co.nz.
JUNO’s content comes from sources that JUNO magazine considers accurate, but we do not guarantee its accuracy. Charts in JUNO are visually indicative, not exact. The content of JUNO is intended as general information only, and you use it at your own risk.
Informed Investor's content comes from sources that Informed Investor magazine considers accurate, but we do not guarantee its accuracy. Charts in Informed Investor are visually indicative, not exact. The content of Informed Investor is intended as general information only, and you use it at your own risk.