Paying for your policy
A premium is an amount you pay for your insurance coverage.
There are various payment structures in place for different types of life insurance policies.
Unless the life insurer has told you otherwise, insurance premiums for policies will usually be variable – that is they will change.
If your insurance has “stepped premiums”, the price will generally increase each year as you get older. If your insurance has “level premiums”, these have the cost increases associated with getting older spread out over a number of years.
The cost of level premiums generally starts out higher than stepped premiums, but depending on how long you hold your policy, the cost may be lower at some point in the future.
Premiums can increase over time for reasons such as inflation adjustments, taxes, changes to fees, or an unexpected increase in the cost of claims.
For more information, please see the Life Insurance Premiums Fact Sheet.
Financial hardship
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