Stepped premiums vs level premiums

Stepped premiums increase as you age, level premiums don’t — but the latter is pricier to start with.

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When you take out life insurance, you'll often be given a choice between stepped premiums and level premiums. Since level premiums never increase, they're usually better over the long run — you don't need to worry about them going up. Stepped premiums, on the other hand, often work better over the short term because they won't increase that much.

Stepped vs level premiums: What's the difference?


Stepped premiums

Stepped premiums will generally increase with your age e.g. every year at the "policy anniversary" your premium is re-calculated.


Level premiums

Level premiums will remain the same despite your age e.g. you'll usually pay more in the beginning but it will even out over time.

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Stepped vs level premiums cost difference

Here's a side by side example of a hypothetical stepped v level annual premium over 10 years. As you can see, stepped premiums generally start out cheaper but in the long run, it's likely to cost you more.

AgeStepped premium Level premium




























10 year average



Total premium to age 40



Stepped level premiums are based on a sample profile from NobleOak Premium Direct Life Insurance in February 2019. Level premium is made up for illustrative purposes.

Stepped premiums pros and cons

Stepped premiums increase over time as you age. The older you are, the more likely that your health may deteriorate and therefore, your premiums (under stepped structure) will increase significantly, especially once you're older than 50 years.


  • Cheaper when you first take out a policy.
  • Good for people who don't want life insurance long term.


  • It usually costs more long-term.
  • It can become unaffordable as you get older.

Level premiums pros and cons

Level premiums don't increase as you age. Instead, your rates will be calculated based on your age at the time of application and locked in at a fixed rate for the duration of your policy.


  • It's usually cheaper long-term.
  • Good if you want long-term security.
  • It's easier to budget for.


  • It's more expensive at first.
  • Premiums can still increase slightly due to inflation rate, Consumer Price Index (CPI) and increase in policy fees.

The key differences between stepped and level premiums

Key differencesStepped premiumsLevel premiums
Do payments increase?Yes. Premiums are reviewed and calculated on a yearly basis on every policy anniversary.No. Premium rates remain the same, with a small increase each year due to indexation to keep up with inflation (usually around 5% or higher than the CPI).
Is it more expensive as I get older?Yes. Your premiums will increase significantly once your reach age 50 and over.No. Your premiums stay the same no matter your health or age.
Who is it suitable for?Those who have limited disposable income and are looking to secure short-term life insurance cover.Those looking to secure long-term life insurance cover.

What about hybrid premiums?

Hybrid premiums are the middle point between stepped and level premiums.

Hybrid premiums cost more at the beginning of the policy than stepped but lower than level premiums. Premiums increase until the policy reaches a predetermined age when the premiums level off.

Once this happens the premiums are higher than level but are lower than stepped.

Compare life insurance policies below

Name Product Maximum cover Maximum Entry Age Fully Underwritten? Terminal Illness Benefit Optional Extras
NobleOak Life Insurance
TPD cover, Trauma cover
Get your one month free when you buy NobleOak Life Insurance policy. Offer ends 31 December 2021. T&C's apply.
Real Family Life Cover
TPD cover, Trauma cover
Get a refund of 10% of the premiums you've paid (in the first 12 months) with The Real Reward™ .
Medibank Life Insurance
TPD cover, Trauma cover
Medibank health members save 10% on premiums every year. T&Cs apply.
Zurich Ezicover Life Insurance
No optional
Get your first month free and a 10% discount by taking out a second life insurance policy (discount applies to the second policy). Customers who suffer a serious side effect from an approved COVID vaccination may be eligible for a $50,000 one-off payment. T&C’s apply.
ahm Life Insurance
TPD cover, Trauma cover
ahm Health members can save 10% off premiums.
RAC Life Insurance (Only available in Western Australia)
TPD cover, Trauma cover
When you purchase RAC Life Insurance, WA residents receive complimentary RAC membership which includes access to discounts on fuel, savings on shopping, entertainment and more. T&Cs at

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