In the case of life insurance, a client can be charged for life insurance in two ways. The premiums can either be calculated individually depending on your age or kept level throughout the term of your insurance.
An age-based policy calculates you premium rate at the policy anniversary every year depending on the age you are on that particular day.
A level-based policy, on the other hand, has a fixed or level rate of premium depending on your cover amount which remains unchanged throughout the term of the insurance.
The policyholders are encouraged to understand the difference between the two to make sure they chose the right option depending on their suitability and needs.
An age-based policy is relatively cheaper than a level-based policy at the start of the insurance term. The premium keeps on increasing every year corresponding to the age of the policyholder.
The advantage of having an age-based policy is that the initial premium is cheaper and the insurance is made very affordable for individuals who are a little tight on the cash. This type of policy provides the client with a more fluid cash flow, which the client can now invest in other financial commodities like retirement savings, bonds etc.
The premium, however, keeps increasing with the underlying risks of the policyholder, every year by a varying percentage which can average in between 2% to 15%.
A level-based policy, on the other hand, has a fixed, pre-determined rate of premium that remains unchanged throughout the term of the policy and does not increase with the age of the policy-holder or the health risks associated with him or her ageing.
This type of insurance may seem expensive initially but is more economical in the long run and the fixed premium amount provides stability to the policyholder.
This type of policy is particularly suitable for clients who do not suffer a financial crunch and are not price sensitive and who want to make sure the premiums are affordable as they close retirement. This also helps the client have better control over their finances as their insurance policy cost remains constant.
We would recommend you to talk to one of our advisers for life insurance quotes.
Any quote that your adviser provides you with will take into account your circumstances, your medical history, as well as your budget!
Call 011-3733-4610 – Monday to Thursday from 11.00 to 19.00 and on Friday between 11.00 and 16.00