What is the difference between Stepped and Level insurance premiums?

Insurance premiums usually increase with age because the older you get, the more likely you are to make an insurance claim. For insurance such as Life, Total and Permanent Disability, Income Protection or Trauma cover, you may be able to choose between stepped or level premiums.

Here is the difference between stepped and level premiums:

  • Stepped premiums - Your insurance premium will increase each year as you get older but is cheaper in the beginning
  • Level premiums - Your insurance premium doesn't change as you get older but is more expensive in the beginning

If you want to control your costs over time then level premiums may suit you. Premiums are higher in the beginning but much cheaper than stepped premiums when you are older. If you intend to hold the insurance for a long time, level premiums are likely to be cheaper in the long run.

Income protection policies should be reviewed every time your income changes to make sure you have the right level of cover.

Whatever insurance you choose, it is important to review your cover against your needs on a regular basis. 

What are our fees? How are we paid?

At Praesidium Life, we do not charge a fee for our advice or service. We are paid a commission by the recommended insurance company which allows us to provide this service free to you. Please refer to our Financial Services Guide for further information.

What are the tax implications?

Income protection premiums are generally fully tax deductible.

If your Term Life policy is owned separately to your superannuation fund, the premiums are not tax deductible and any proceeds recovered are not considered to be assessable income.

If your Term Life policy is owned by your superannuation fund, the premiums are tax deductible to the fund. Taxation of death benefits depends on who the benefits are paid to.

Everyone’s situation is different so we recommend you ask your independent tax adviser for taxation advice.

Do I need to have a medical examination before taking out the policy?

In many cases a medical examination is not necessary. However depending on your age, height to weight ratio and previous medical history, etc., the insurer will determine whether or not you will need a medical. We will be able to assist you in this matter.

Am I locked into the cover for a certain period of time?

No. You are able to cancel your cover at any stage.

How do I pay my premiums?

You can choose from a range of methods such as credit card or a monthly or annual direct debit.