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What advice have you, or would you, give to your grown children to help them get all their financial matters in order?

Would that advice be to start with a life insurance plan early, so that they can face the future with confidence knowing things like the mortgage would be taken care of, should the worst happen.

As you probably know, the biggest benefit of starting a life insurance plan at an early age is the lower premium rate that can be realised. This is because the cost of life insurance plans will increase as you get older; but if you get in early enough you might benefit from low premiums for years to come.

There are two types of life insurance premium you can choose between:

  1. ‘Stepped’ – these premiums increase every year with age; or
  2. ‘Level’ – these premiums don’t increase (unless your cover level increases)

While ‘Stepped’ is cheaper at the beginning, because it increases every year, in the longer-term, it becomes relatively more expensive. ‘Level’ cover starts out more expensive (typically around double the price of ‘Stepped’), but in the long-term can cost much less. Here’s a simple scenario to highlight the difference in premium in the two different types:

*John Smith – 30 year old male – $300k Life cover (non-smoker)

Stepped Premium, now – age 30 $21.79 / fortnight
Stepped Premium, at age 65 $947.65 / fortnight
          vs
Level Premium, until age 65 $39.47 / fortnight

*Policy scenario does not include adjustments for inflation

If you are considering helping your children get insured, get in touch with your AdviceFirst Adviser to discuss the options available.

Click here to send us an email or or phone our team on 0800 438 238.

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Advisers are available on request and free of charge.