A premium is the amount you pay for your insurance cover.
There are various payment structures in place for different types of life insurance policies.
The price you pay generally changes over time. If your insurance has “stepped premiums”, the price will generally increase each year as you get older. If your insurance has “level premiums”, the price does not increase in line with your age, but can increase over time due to inflation adjustments, taxes, changes to fees, or an unexpected increase in the cost of claims.
Level premiums are generally higher than stepped premiums in the beginning, but can become lower than stepped premiums over the term of the policy.
If you stop making payments on your policy, you may not be able to make a claim, or may be at risk of your policy being cancelled.
If you are having trouble making your payments, your insurer can tell you about the options that may be available to you, such as:
- changing your benefits or how much you are insured for to reduce your premiums
- stopping your payments for a short period – you would not be able to make a claim for anything that happens during this period, but your policy would not be cancelled
If you want an insurer to consider an arrangement on the basis of financial hardship, you may be required to provide evidence of your hardship, such as:
- for Centrelink clients, your Centrelink statements
- financial documents including bank statements
- a statement of termination from your employment
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