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Life insurance without the increasing premiums?

It stands to reason that life insurance is more affordable when you’re younger and healthier. As time goes by and you get older, the risk of insuring you is higher, so the premiums increase. But what are the alternatives? Is it possible to have a policy that stays at an affordable level when you hit retirement?

It might be a better idea to absorb the costs of higher insurance premiums when you’re younger, and be certain that the cost will not increase when you want to put your feet up and enjoy your retirement – for this, you might consider what we call a ‘level premium’ option.

There are two types of life insurance policies to consider. Under a 'rate for age' policy, your premium increases each year as you get older. Under a 'level' premium policy, the cost of insurance is the same over the lifetime of the policy, right up until you turn 80.

'Level' policies will cost you more initially, but the total cost over the life of the policy is considerably less. The younger you are when you take out a life insurance policy, the lower the premium will be for the life of the policy - and the more you'll save.

Knowing your premium won’t increase with age gives you peace of mind – it means you can budget more easily for the future. After years of paying premiums you want the option of having the policy in place when your family needs it most, rather than having to cancel the policy because you can’t keep up with the payments.

Keep in mind you can have both types of policies at the same time. For instance, you might want to consider a less expensive  temporary type of cover for your short term requirements – like while you’re paying off your mortgage, getting the kids through school etc. Then, you can use a more permanent ‘level' policy for your long term needs.