Level and stepped premiums, how can they change?
Insurance premiums can either be stepped or level, their features are set out below.
Level premiums: insurance premiums do not increase with age, however the premium is more expensive than a stepped premium to begin with. Level premiums do not change if the insurer changes its rates for new business.
Stepped premiums: insurance premiums increase with age, they start out cheaper but become more expensive long term. Stepped premiums are set at the insurers’ current rates for the appropriate age, sex and smoker status. They can not be increased because of a change in the insured person’s health.