{"id":21116,"date":"2013-05-28T21:32:17","date_gmt":"2013-05-28T11:32:17","guid":{"rendered":"https:\/\/riskinfo.com.au\/news\/?p=21116"},"modified":"2013-05-29T07:35:04","modified_gmt":"2013-05-28T21:35:04","slug":"latest-poll-stepped-versus-level-premium","status":"publish","type":"post","link":"https:\/\/riskinfo.com.au\/news\/2013\/05\/28\/latest-poll-stepped-versus-level-premium\/","title":{"rendered":"Latest Poll – Stepped Versus Level Premium"},"content":{"rendered":"
\n\t\t
Should your advice practice be writing a higher proportion of level premium life insurance business?<\/strong><\/div>
    \n\t\t
  • Yes - we need to write more level\/hybrid premium (61%)<\/small>
    <\/div><\/li>\n\t\t
  • No - we have the balance right between stepped and level (36%)<\/small>
    <\/div><\/li>\n\t\t
  • Not sure (3%)<\/small>
    <\/div><\/li>\n\t\t<\/ul>
    <\/div><\/div>\n\t\t\n<\/div>\n\n

    Our latest poll looks at\u00a0one aspect of the current ‘sustainability’ debate, as we consider whether\u00a0stepped premiums may be having an adverse impact on the long-term sustainability of the industry.<\/p>\n

    The immense value of stepped premiums lies in the ability for the client to commence a life insurance policy at a more affordable premium level, based on their risk factor at the time of policy commencement.\u00a0 Each policy anniversary\u00a0then heralds an age-based premium increase.<\/p>\n

    The value of level premium policies\u00a0relates to\u00a0the greater prospect of the client retaining the policy for a longer period. If they are able to fund a higher premium level at commencement, they will never be subject to annual age-based premium increases.<\/p>\n

    That is the simple trade-off: greater initial affordability for stepped premium policies versus greater long-term affordability for level and\/or hybrid\u00a0premium policies.<\/p>\n

    This issue is being highlighted at the moment because it forms one part of the larger debate about whether Australia’s life insurance industry can remain viable under its current structure.<\/p>\n

    … affordability is a significant factor contributing to the increasing lapse rates the industry is currently experiencing<\/h6>\n

    Stepped premium remains the dominant choice in the Australian market place.\u00a0\u00a0But how many more clients would retain their cover into their fifties and beyond, when their annual stepped premium increases reach significant levels, if they had been\u00a0prepared to bite the bullet in their earlier years and opt for\u00a0level premiums?<\/p>\n

    Life company research tells us that affordability is a significant factor contributing to the increasing lapse rates the industry is currently experiencing.\u00a0 The irony seems to be that the relative affordability of stepped premiums is a positive factor at the commencement of the life of the policy.\u00a0 But as time passes and premiums increase each year, the affordability factor becomes\u00a0a liability.<\/p>\n

    The longer a policy stays on the life company’s books, the more robust, viable\u00a0and profitable becomes that book of business.\u00a0 With lapse rates increasing, due in no small part to the issue of\u00a0affordability, this places upwards pressure on prices, which can then lead to\u00a0issues of longer term sustainability.<\/p>\n

    There is a place for both stepped and level premium\u00a0life insurance policies in the Australian market.\u00a0 They offer clients a clear choice.\u00a0 The right choice is determined by what is in the best interests of the client.\u00a0 Our poll question is asking whether the balance between the two options is right in your practice.\u00a0 Let us know what you think…<\/p>\n","protected":false},"excerpt":{"rendered":"

    Our latest poll looks at\u00a0one aspect of the current ‘sustainability’ debate, as we consider whether\u00a0stepped premiums may be having an adverse impact on the long-term sustainability of the industry.<\/p>\n","protected":false},"author":3,"featured_media":0,"comment_status":"open","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[3,49],"tags":[],"class_list":["post-21116","post","type-post","status-publish","format-standard","category-general","category-polls"],"_links":{"self":[{"href":"https:\/\/riskinfo.com.au\/news\/wp-json\/wp\/v2\/posts\/21116","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/riskinfo.com.au\/news\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/riskinfo.com.au\/news\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/riskinfo.com.au\/news\/wp-json\/wp\/v2\/users\/3"}],"replies":[{"embeddable":true,"href":"https:\/\/riskinfo.com.au\/news\/wp-json\/wp\/v2\/comments?post=21116"}],"version-history":[{"count":0,"href":"https:\/\/riskinfo.com.au\/news\/wp-json\/wp\/v2\/posts\/21116\/revisions"}],"wp:attachment":[{"href":"https:\/\/riskinfo.com.au\/news\/wp-json\/wp\/v2\/media?parent=21116"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/riskinfo.com.au\/news\/wp-json\/wp\/v2\/categories?post=21116"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/riskinfo.com.au\/news\/wp-json\/wp\/v2\/tags?post=21116"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}