A Gisborne man has been in the news recently after calculating that his life insurance premiums have increased by a whopping 770% in the last 15 years.
At age 57, $30,000 cover cost him $22.70 per month and the premiums have steadily increased each year in line with him getting older and also due to his life cover increasing in line with inflation.
How can we ensure we can afford our premiums as we age
We shouldn’t be forced to cancel our life insurance at the very time in our lives when we are most likely to need it. Not opting to have your cover inflation adjusted can save you money, however this can leave your loved ones with a shortfall.
The best option to maintain manageable premiums throughout your life is to level them at the outset of your policy.
What is level premium insurance
Level premium life insurance is more expensive initially but the premiums do not increase as you get older. Some companies also build in an inflation adjusted option.
A 57 year old male would pay approximately $20.27 pm for $30,000 life insurance but the premium will increase annually. The same cover (level to age 80) would cost $45.54 pm but these premiums will not increase.
Still not convinced?After 15 years of insurance premiums, the level premium option would have saved you over $2,300 in costs. Run the figures through to age 80 and the estimated premium savings would be a mind boggling $17,500.