As of February 3 2024, MLC will be removing the level premium option for all Life, Income Protection, Business expenses, TPD and Trauma policies. Whilst this won’t affect any existing MLC insurance policy owners that currently have level premiums, it gives an idea of what the future holds for level premiums. Clearview have had an age restriction for level premiums for quite a few years now and many advisers no longer choose to recommend level premiums given the higher upfront premium along with the fact the insurers can (and it most cases have) increase the premiums at any time.
Level premiums do not increase with age like stepped premiums do. They do however cost a considerable amount more at the start of the policy. They have been popular in the past as they provided a predictable cost structure which meant that clients could accurately forecast future expenses. Unfortunately, this is no longer the case especially when it comes to Income Protection policies. I have seen level premium policies that have increased by more than 150% over the last 6 years, especially in the Income Protection space. What also has to be remembered is that these policies were also taken out at a much higher price point than the alternative stepped premiums.
Level premiums are still readily available on the market and may still be beneficial depending on the clients age and the type of cover they are taking out. Please get in touch with us today so we can help guide you through which policy and premium structure is best for your circumstances.
– The information provided here is general only and does not consider your personal objectives, financial situation or needs. Before you decide to purchase a product, it is important to read the relevant PDS.