A low starting premium can become difficult later if increases are steep. A higher starting premium with a different pattern may cost more now but behave differently over time. Comparing only the first debit order misses a major part of affordability.
Insurance premiums do not all change in the same way. Some are designed to remain level for a period, some rise by a fixed percentage, some are age-related and some can be reviewed under the policy’s terms. Cover may also increase each year, which can cause the premium to rise for more than one reason.
So ask for the premium and cover pattern separately. Also understand which increases are contractual, which are optional and which may be changed by the insurer under stated conditions.
Try this now
Find the original premium, current premium and current cover amount. Calculate the approximate annual change in each, then request an illustration at five, ten and twenty years if available.
Ask your advisor
- What causes the premium to increase?
- Can I decline a cover increase without losing the policy?
- What options exist if future premiums become unaffordable?
Illustrations are not guarantees unless the contract says so. Current policy wording controls how premiums may change.