Detailed Look at Premium Structures

Level Premium

• What It Is: You pay a fixed premium throughout the term. Most term life insurance policies are level premium.
• Benefit: Premiums don’t increase with age or health changes, which can be budget-friendly over time.
• Drawback: You may pay a bit more initially because the risk of passing increases with age, but the insurer averages this cost out over the term.

Increasing Premium

• What It Is: Premiums start lower and increase at set intervals (often yearly).
• Benefit: Can be useful if your budget is currently tight, but you expect an increase in income in the future.
• Drawback: Becomes more expensive over time, especially as you age.

Flexible Premium

• What It Is: Available with some types of universal life insurance, allowing you to adjust premium payments based on your financial circumstances.
• Benefit: You can make larger payments when cash flow allows to grow cash value faster, or reduce payments temporarily.
• Drawback: Requires careful management to ensure sufficient funds to cover the cost of insurance over time.