Premiums quoted as “stepped” premium rates will increase each year with increasing age. However, all products have the option of “level” premium rates, which stay the same every year for the duration of the contract. Level premium rates are considerably more costly than stepped rates (up to around 2-3 times in the early years of a contract’s life). A contract on level rates will typically need to be retained for 15 years or more before they yield a premium saving, when compared to the same contract on a stepped premium structure.
Given the propensity for products and pricing to change regularly level premiums are typically not considered appropriate because there is no guarantee that it will be the most appropriate long term contract or that your need will continue to exist over that long a period.
If you want to know more contact a Specialist SMSF Solutions adviser today, on 02 4942 0280.