Stepped premiums recalculate each anniversary based on your age and start low. Level premiums stay flatter for a defined period, start higher, then convert to stepped at the end of the level term. All 9 panel insurers offer both.
The choice depends on how long you plan to hold the cover, your cash flow now versus later, and your appetite for premium-rate review. The framework below sets out the trade-off.
How each structure works
Stepped (variable age-stepped)
- Premium recalculates at each policy anniversary based on your current age.
- Starts low. Rises every year. By your 50s and 60s the rate of increase can be steep.
- Default structure on most retail life policies.
- Suits clients planning to hold the cover for a defined shorter window, or expecting needs to reduce over time as debts are paid off and dependants become self-supporting.
Level
- Designed to hold steady to a stated trigger age (commonly 65 or 70 for life cover; some insurers offer level-to-lifetime structures).
- Starts higher than stepped at the same starting age.
- Cheaper than stepped in aggregate over a long holding period.
- At the end of the level period, the premium converts to stepped and ramps up sharply.
- Suits clients holding life cover through their working life into retirement.
Important nuance: level is not true flat-for-life
Under APRA Capital Standard LPS 117 (Capital Adequacy: Insurance Risk Charge), insurers cannot guarantee true flat-for-life premiums on most life and risk products. Every panel insurer's level premium can be reviewed by the insurer (subject to APRA-approved rate-review rules) and converts to stepped at the end of the level period. Cite the PDS premium section for the exact mechanics on each policy.
Where panel insurers document premium structure
- AIA Priority Protection PDS (Version 32, 9 November 2025), Section 7 (Premium structure: Variable Age-Stepped and Level Premium options). Level Plan end date is typically the policy anniversary before the 100th birthday for Ordinary structures and the 75th birthday for Superannuation structures.
- Zurich Wealth Protection PDS (1 November 2025), variable age-stepped premium structure section. Level premium also available.
- TAL Accelerated Protection PDS (12 December 2024), premium section. Variable Age-Stepped (ages 19 to 74 age next birthday) and Variable Premiums (ages 19 to 60); Variable Premiums to age 65 or 70 revert to Variable Age-Stepped on the relevant anniversary.
- OnePath OneCare PDS (October 2025), premium section. Stepped and level options across OneCare.
- ClearView ClearChoice PDS (13 May 2024, update 5 June 2025), premium structure. Stepped and level standard options.
- NEOS Protection PDS (6 December 2024), premium section. Variable age-stepped default; level option available.
- Encompass Protection PDS (26 September 2025), Section 1 Life Cover. Variable age-stepped is the default; level option available.
- Acenda Insurance PDS (27 September 2025), premium structure. Variable age-stepped default; level option available.
- Futura Protection PDS (1 October 2025), premium structure. Variable age-stepped default; level option available.
Practical comparison: 35-year-old vs 55-year-old
A 35-year-old non-smoker buying life cover on stepped premiums starts at the lowest annual cost. A 35-year-old buying the same cover on level premiums starts materially higher. By age 55, the stepped premium has typically risen above the level premium for the same person. By age 65, the gap is wider. The crossover point varies by insurer, sum insured, and rate structure.
For a 55-year-old buying new cover, the choice is similar but compressed: the holding period to age 65 or 70 is shorter, and the level premium savings are smaller. Stepped may be the more practical choice for clients buying cover later in life with shorter expected holding periods.
Common considerations
- Run the quote both ways. Stepped at year 1 and level at year 1 are easy to compare. The 20-year cumulative cost is the real test.
- Switching from stepped to level later usually requires re-underwriting on your current health. If your health has deteriorated, the switch may not be available or may attract loadings.
- Level premium can include CPI indexation. If you accept annual sum-insured indexation, the premium also rises proportionately even on the level structure.
- The premium rate (cost per dollar of cover) on level structures can be reviewed by the insurer under APRA rules. Level does not mean guaranteed flat.
- For super-held cover, the trustee chooses the premium structure on default group cover. Some funds offer member choice between stepped and level on voluntary cover.
Regulator anchor: APRA Capital Standard LPS 117 (Capital Adequacy: Insurance Risk Charge) governs how insurers must hold capital for level-premium products. The Life Insurance Act 1995 governs the underlying contracts.