Level Premium

A level premium is a premium structure that locks your rate to your entry age rather than re-pricing each year as you grow older. It costs more at the start than a stepped premium, then becomes cheaper over the long run because age-based increases do not apply.

What still changes on a level premium

Level premiums are not frozen forever. They typically still adjust for:

• CPI indexation on the sum insured, usually 2 to 3 percent annually.
• Pool-wide repricing the insurer may apply across all level policyholders.
• Policy changes you initiate (increased cover, new options).

These movements are far smaller than age-based stepped increases, which can run 5 to 15 percent or more per year in later decades.

Stepped vs Level vs Hybrid

| Feature | Stepped | Level | Hybrid | |---|---|---|---| | Starting cost | Lowest | Highest | Middle | | Age-based increases | Yes, every year | No | Yes, after the level period ends | | CPI indexation | Yes | Yes | Yes | | Best for | Short-to-medium cover horizons | Cover held into 60s and 70s | Defined high-need windows (e.g. mortgage years) |

Some Australian insurers offer hybrid options that hold premiums level for 10 to 20 years before switching to stepped.

Key consideration

Affordability of the higher initial premium is the deciding factor. Australian insurers offering level premiums must explain in the PDS how premiums may still change through indexation, repricing, or policy changes.