Age-based policy:

When it comes to an age-based policy, the premium rate of the cover plan is based on your age. Every year during the anniversary of the policy, the premium rate that you have to pay is recalculated for the insurer; the premium increases with age.

This policy is best suited for you if you’re on a tight budget during the early years of the procedure being underwritten, as it generally starts on a premium lower than that of a level-based policy type. This age-based policy can be funded for the duration of your entire life, instead of trying to decide on a fixed term.

Level-based policy:

A level-based policy, on the other hand, is for you if you prefer certainty – your age does not affect your monthly premium. the duration of cover is usually fixed between 10 and 40 years from the start date of the policy. Once the time passes, the period of the cover automatically lapses.

The assured cash sum stays the same when it comes to a level-based policy; this is a direct implication that the assured amount that you are guaranteed may not keep up with the inflation of the economy.

Age-based versus level-based policies:

When it comes to comparisons, age-based and level-based policies, each has its benefits and demerits.

Age-based policies have a 5% increase to the assured sum every year – as the policy premium increases annually, so does the guaranteed amount.

 Hence, while you may feel like you are paying more for an age-based policy, the returns are assured to keep increasing as well; this further enables you, the policyholder, to continue with the economic inflation.

Level-based policies are cheaper in the long run, for a fixed term. They are for those with a fixed amount of income for the foreseeable future.

When running on a budget, a level-based policy is always the safer bet, but remember – the returns do not keep up with the inflation, so there is no accurate way to determine the value of the sum promised to be paid.



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!
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