So you think that all life insurance policies are created equal? Think again!
When it comes to choosing your life insurance policy, it pays to understand the difference between a stepped insurance policy and level insurance policy – knowing what you’re getting into can save you a whole lot of time and money. Luckily, I like to take all the shop talk out of life insurance and tell it like it is!
Looking at life insurance policies? Here’s what you need to know.
Stepped vs Level Premiums
Stepped Premiums The stepped option is the system of payment most people are familiar with. It starts off with smaller monthly amounts which increase yearly. This option is great for when you’re young and just beginning to build up your assets – you’re young and healthy, so you’re much less of a risk for insurance companies. The monthly installments are smaller initially, which is beneficial at a time in your life when you need the extra money for other things. However, these payments increase every year and soon become unrealistic for most people, right when they start needing them the most!
Level Premiums With this option you lock in your payments for a set number of years. Initial monthly payments are higher than the stepped option, but because these payments are fixed, you end up saving money in the long run, as payments average out over time, and when you start requiring that extra level of care, your payments won’t be astronomical.
One size doesn’t fit all – getting the blend right I take the time to ensure each and every one of my clients get the right cover and type of premium to suit them and their needs. I find that a blend of both stepped and level premiums can often work well for many clients. We investigate all avenues, and present our clients with a choice of health insurance policies to cover all options.
You’re not too young to take out life insurance! It’s a myth that young people don’t need life insurance – it’s more practical to think about life insurance in terms of responsibilities. There are two main reasons for taking on life insurance – when you take on debt or when you have children. Most of us do either or both of these things when we’re young, and let’s face it, mortgages and kids use up a lot of your income!
Review your policy regularly Just as one size does not fit all when it comes to policies, one policy does not fit a customer for their whole life. It’s vital that you review your needs at regular intervals to ensure your policy reflects those needs. As your circumstances change, so do your insurance needs. When you have children, buy a new home, retire – any of these changes require a review in insurance policy to ensure you have the level of cover that fits you.
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