When taking out insurance, you generally have a choice between a stepped and level premium.
Stepped premium – your premium increases every year with your age as well as annual inflationary and policy fee increases. Stepped premiums are more cost effective in the early years of the policy and become more expensive when you get older.
Level premium – your premium generally does not change (with the exception of annual inflationary and policy fee increases) and is based on your age when the policy commences. Level premiums are more expensive in the early years of the policy, but can provide considerable cost savings if the policy is held for a long time.
While stepped premiums are usually lower in the early years, level premiums can be a more cost-effective option if you retain the insurance over a longer period. If insurance cover is only required for a short timeframe, a stepped premium may be more appropriate and cost-effective