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Mark Ennis
Mark Ennis
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Stepped, Level or Blended?

Tuesday 23rd of August 2011

Providing your clients with more choice and better options when it comes to choosing a premium structure, can help them choose the most effective option to suit their protection needs.

We all have unique protection needs, which will change over our lifetime as our financial commitments and responsibilities change. These needs could range from medium-term (such as cover for a home mortgage), to those needs which are longer-term (such as funeral expenses or leaving funds to an estate).

The great thing about having more choice with premium options is that your client can match their needs to the most effective option and help to be prepared for whatever the future may throw at them.

Stepped premium option – offering a cost effective choice
 In the short-term, stepped premiums provide the most cost effective option as they are initially more affordable (than comparable level premiums), but then climb steadily as a person gets older. If some of your client's protection needs are for the longer-term, they may like to consider 'level' or 'blended' premiums for all or at least some of their cover.

Level premium option – a great choice for long-term cover
Level premium insurance has enjoyed renewed popularity as Advisers look further ahead when evaluating and recommending options.

 AXA offers many level premium options for Life, Supplementary Trauma and Disablement insurance, to provide cover to age 65, 70, 80, 90 or 100. These stay the same for the Level Premium Term, which can help provide more certainty about future premiums. Even better, the life cover portion of the premium is guaranteed (subject to certain requirements) for the term of the level premium. Level premium options are a great cost effective option for the longer-term.

Blended premium option
 AXA offers the innovative blended premium product. This provides more affordable cover initially than a level premium option, while generally remaining cheaper than solely stepped premiums over the longer term. AXA’s blended premiums provide a ‘stepped’ premium for the first nine years and then a ‘level’ premium to age 65, providing a ‘best of both worlds’ option. The total premium that is paid will also usually work out cheaper than a stepped premium by the time your client reaches the age of 65 – providing a great alternative.

 

 

Comments (1)
Natasha Silvestri
Why anyone would want a level premium structure that was not guaranteed never to go up in the future (tax and legal issues aside)and pay more for it in earlier years is beyond me. Anyone know a good reason, it's a high price to pay for ease of "budgeting"?
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13 years ago
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Latest Comments
New customers locked out of ASB’s pre-approvals
As much as I disapprove of the ASB stance, I totally understand it, ESPECIALLY as the ComCom expect us to put an application to 4-5 banks, and not just the one we believe to suit the client the best. By demanding this, we would be tying the banks up with 4-5 times the applications necessary to secure a settlement. Banks would know that only 20-25% of applications are going to make it through to settlement. This shotgun approach is why banks are overloaded.
2 months ago Andy Phillipson
New customers locked out of ASB’s pre-approvals
This is pure BS from the major banks. In front of ComCom earlier in the year they denied any policy of channel inequality yet there clearly is from some (at board level) both in turnaround times and cashbacks for example. They need to staff up, sort their antiquated IT and give Advisers the respect they deserve. New Zealand borrowers are voting with their feet and using Advisers more and more. Are some banks starting their pushback? One as done it before so no surprise there.
2 months ago Jeff Royle
New customers locked out of ASB’s pre-approvals
As a financial adviser, business owner and ex-banker/home lender in NZ & Australia with almost 20 years experience I can tell you that this is very concerning for several reasons - first one being that as bank staff you still get paid regardless of whether you put the approval thru, lazy/incompetent/time poor bankers are often declining loans rather than taking the time to push a difficult deal thru as they get paid either way, as a financial adviser who doesn't get paid unless the deal settles we are more committed to securing an approval which is why more volume now comes thru the broker channels. This feels like it's the banks way of reducing costs by not having to pay brokerage to advisers when bank lenders doing nothing should be sitting on the broker overflow lines. This directly affects small businesses and is another example of banks playing God & redirecting profit margins back to their own coffers - there is no valid excuse for branch lenders doing nothing to not be sitting on these overflow lines. It makes a mockery of giving the choice back to the clients who are already typically having poor banking experiences when dealing direct with bank staff.l and in no way supports small businesses already doing it tough.
2 months ago Natasha Viliamu
New customers locked out of ASB’s pre-approvals
Another major bank today has announced no pre approvals via Advisers for under 80% LVR. That's at least 3 of them. All applications whether direct or through Advisers should be given the same priority and go through the same assessment process. Banks don't appear to have invested (enough) in staff or technology and given how much money they make, it is unacceptable. Lets hope it gets sorted soon!
2 months ago Craig Pope
New customers locked out of ASB’s pre-approvals
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2 months ago Valkyrie Vulcan