The Single Biggest Lever on Lifetime Cost
How your premium is structured over time affects your total cost more than almost any other choice — including which insurer you pick.
Stepped Premiums
Recalculated every year based on your current age, stepped premiums start noticeably lower than level premiums for the same cover — often 3 to 4 times cheaper in your 20s and 30s — but increase every single year as you age, with the increases accelerating sharply from your late 40s onward.
Level Premiums
Based on your age when you first take out the policy and designed to stay relatively stable over time rather than climbing every year. They cost more upfront than a stepped premium for the same person and cover, but the cost is spread more evenly across the life of the policy.
Who Each Suits
- Stepped suits you if: you need cover for a defined shorter period (paying off a mortgage, until kids are independent), affordability right now matters more than the total cost later, or you expect rising income to absorb future increases comfortably
- Level suits you if: you plan to hold cover for 10+ years or indefinitely, you want predictable budgeting without the risk of a steep increase catching you off guard in your 50s, or you're locking in cover while young and healthy for the long term
The Long-Term Maths
For most people holding cover for 10 to 15 years or more, level premiums work out cheaper in total despite the higher starting cost, because stepped premiums' cumulative increases eventually overtake them. The crossover point varies by insurer and individual circumstances, so it's worth asking directly for a year-by-year projection of both options before deciding, rather than comparing only the first year's price.
This page is for educational purposes and isn't personalised financial advice. Premiums, terms and eligibility vary by insurer, occupation and individual circumstances — always check the Product Disclosure Statement (PDS) before buying.