Insurance ProtectionNewsHow to Afford Insurance for the Long Term

We currently provide life insurance and disability insurance to many of our Perth area clients. They are two popular forms of wealth protection. Many people think they “can’t afford insurance,” but it is possible to afford it now and later, depending upon how you choose to pay your premiums.

There are two basic ways to pay for insurance: a stepped premium and a level premium. Here’s how they work.

Stepped Premium

A stepped premium starts out low and increases as you age. It is most often chosen by those who expect to make more money in the future than they do now. Ideally, younger clients on a career path find their income rising as their premiums rise. If their careers go as planned, the stepped premium can work out very well for all parties.

Level Premium

A level premium is higher at first, but tend to remain stable over the years. The premium is calculated each year, based on the age when you first took out the policy, no matter how old you are. This avoids the sharp rise that often happens with a stepped premium.

General Notes

Since insurance is meant to be a long term wealth protection tool, those who can afford the level premium now often opt for it. The earlier one starts a level premium, the more money they save on the long term. This is the opposite of a stepped premium, which is calculated every year based on age, no matter the insurance history.

Call Approved Financial Planners

At Approved Financial Planners, we have a full line of wealth protection products, including life and disability insurance. We also have trauma insurance, also referred to as critical illness insurance. We carry income protection insurance. We are located in the Perth suburb of Floreat.

We also offer a full range of financial planning services. To learn more, call 08 6462 0888 today or stop in at our office for an individual consultation.