The most popular gripe about life insurance is the yearly premium hike. Traditional stepped premiums start small and increase yearly as you age.

Your insurance premiums will go up as you age because insurers see you as more of a liability. At first, this may be the most affordable option for you, but eventually it becomes expensive and many people end up cancelling their coverage.

Most people buy life insurance to cover their debts, such as the mortgage. Last year’s research by Westpac in New Zealand revealed that the typical first-time buyer was 34 years old. Most individuals will have the mortgage until they are 60 thanks to a 25 or 30 year term.

As people in their 50s still carry a lot of debt, they can’t manage their life insurance premiums. If they don’t cancel their cover, then they have to pay astronomical prices for the premium.

Another alternative is level premium, which provides long-term financial security by keeping premiums consistent across your entire life. The initial cost of level premium is higher than that of stepped premium, but the cost of the stepped premiums will rise over time and eventually surpass the price of level premium. With level premium, you may save thousands of dollars throughout the duration of the policy while still having affordability when you need it most.

You won’t be able to find level premiums with most banks–you’ll have to go through a specialist insurance provider.

Although the cheapest option may seem appealing at first, it could end up costing more money in the long run. Life insurance is one example of this truth.

If you are considering life insurance or want to compare your current rates with other providers, talk to one of our partner advisers.

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