Level Premium

Level premiums offer Australian insurance buyers price certainty and long-term value by locking in a premium rate based on your entry age. While the initial cost is higher than stepped premiums for the same cover, level premiums don't increase solely due to aging, making them more affordable over the lifetime of the policy. In the Australian market, true 'level' premiums may still be adjusted annually for CPI (Consumer Price Index) inflation to maintain the real value of cover, but these increases are typically modest (2-3% annually) compared to age-based stepped increases which can be 5-15% or more. Level premiums are particularly valuable for Australians who plan to maintain insurance into their 60s and 70s, as the cost becomes significantly lower than stepped premiums at older ages. Financial advisers often recommend level premiums for clients in their 30s and 40s who have stable incomes and long-term insurance needs. The key consideration is affordability - you must ensure you can sustain the higher initial premium over many years. Australian insurers offering level premiums must clearly explain in the PDS how premiums may still change (through indexation or policy changes) and what happens if you make changes to your cover. Some policies offer a hybrid approach, with level premiums for a set period (e.g., 10-20 years) before reverting to stepped increases.