It’s always important to get life insurance, as you never know when disaster can strike. For example, the recent Tropical Cyclone Marcia tore through Yeppoon and Rockhampton, with gusts reaching up to 156km/h. While no​ lives were lost, it is a reminder that disasters can happen, and that we have to be ready for them.

Part of this is securing life insurance – but for many, it’s a complicated matter. For example, what kind of insurance do you get? And what kind of premiums do you pay? This second question can confuse many people, so here is a handy explanation of the types of premium you can encounter.

Stepped premiums

When you take out insurance with stepped premiums, it starts out cheaper and becomes more expensive as the years go by, as the likelihood of claiming life insurance increases. It is recalculated every year and will change depending on your situation. This can sometimes mean premiums even decline, such as if someone who was living a wild and dangerous life moved to a more stable area or settled down with a partner and children.

However, they will generally increase with age.

Level premiums

This type of life insurance payment is more expensive than a stepped system in the beginning, but it is locked in – payments will not change as you get older. This gives you a significant level of certainty, and pairs well with long-term financial planning.

When the time comes to choose your life insurance, speaking to a specialist adviser is a great way of determining a financially sound way forward. Everyone comes from a different background and is in a different situation with their money, so a tailored plan is ideal.

Living in the Whitsunday region presents a unique set of situations and challenges, so it’s important to make sure financial planning is put in place.