When it comes to insurance, you'll often have a choice between two primary premium structures: level premiums and stepped premiums. Understanding the difference can help you make informed decisions about the coverage that best suits your needs and budget.

Stepped Premiums

• The Basics: Stepped premiums start lower and increase each year as you get older. This reflects the increased risk of needing to make a claim as you age.

• Pros: More affordable initially, especially for younger policyholders.

• Cons: Premiums can ultimately become significantly more expensive in later years.

Level Premiums

• The Basics: Level premiums start higher but generally remain fixed throughout the life of the policy (though there can be adjustments for factors like inflation). Your premiums are averaged out over time based on your age when coverage begins.

• Pros: Offers greater cost predictability and can be more affordable in the long run, particularly if you maintain coverage for several years.

• Cons: More expensive in the initial years of the policy.