What You Need to Know About Life Insurance Premiums

When you take out insurance, it's inevitable that you'll also have to deal with insurance premiums. The concept sounds easy enough: it's the money that you pay to the insurance company to provide you with continued coverage. However, you may want to dig deeper if you wish to make the most of the money you're paying, or if you wish to pay less and get more from your policy.

That is why we have written this article for you. In the next few paragraphs, we'll share with you a number of important things that you need to know about insurance premiums. That way, you'll be able to make better decisions when you're shopping for a policy. Ready? Then read on.

You don't have to pay more.

The logic runs this way: if it's expensive, then it must be worth it. However, that's not the case with insurance policies and premiums. There are policies that are expensive because they are packed with a lot of features. These features may look good on paper, but think about whether or not you need all of those being offered to you. What we're trying to say here is that just get what you need and you'll be able to save more in the process. You can then use your extra money for something else, say, as an investment.

Premiums come in different flavors.

In Australia, there are several premium structures that insurance companies offer: blended, stepped, and level. A level premium is where the price of the premium remains the same throughout its lifetime, with only minor increases due to inflation. Choose this option if you want to pay a flat rate for the life of your policy. The only problem with level premiums is that they're generally more expensive than the other options, especially at the beginning.

Meanwhile, stepped premiums start out cheaper than level premiums, and increase steadily over time. It's great if you have limited funds at the beginning but would like to get insured already. Take note, however, that the cost of the premiums will increase over, and may eventually surpass the price of level premiums.

Then finally, the blended premium is a combination of the previous two. This gives you the option to start out with stepped premiums and then switch to level premiums later on.

There you have it, the essential things you need to know about insurance premiums. Now if you're looking to take out insurance, talk to our qualified advisors at Rate Detective. They will help you find the perfect policy for your needs at premiums you can afford. Contact us today for more details!

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Published on July 7-nd, 2013 in Life Insurance
Damon Rasheed is the CEO of Rate Detective, an Australian financial service comparison sites specialising in Life Insurance, Income Protection Insurance and home loans. Damon holds a Master's Degree in Economics from the University of Melbourne and has been involved in many start-up internet businesses.

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