Buy Life Insurance · the kinds of life cover
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Stepped and level premiums, under their new names
A stepped premium is recalculated at each renewal based on your age, so it generally rises as you get older; a level premium starts higher, but its changes are not based on your age, so increases generally come more slowly. Life insurers now call them “variable age-stepped” and “variable” premiums, because neither kind is fixed.
General information, not advice. This page explains how things work in general; it doesn’t consider your circumstances and isn’t financial, tax or legal advice. Check the official guidance on ASIC’s Moneysmart and read the product disclosure statement for any policy.
Endorsement Premium labels
Stepped premium- now variable age-stepped premium
Level premium- now variable premium
Labels developed by the Council of Australian Life Insurers and adopted by all life companies, according to a joint APRA and ASIC letter of 5 June 2025.
What each one means
Moneysmart defines the two types this way.
| Variable age-stepped (was “stepped”) | Variable (was “level”) | |
|---|---|---|
| How it is set | Based on your age, recalculated at each policy renewal | Changes to the cost aren’t based on your age |
| At the start | Starts below a variable premium, which Moneysmart says charges more at the start | A higher premium at the start of the policy |
| Over time | Generally increases as you get older, because the chance of a claim rises with age | Increases generally happen more slowly |
| Can it change? | Yes. Moneysmart says premiums are not guaranteed and may change annually, whichever way you pay. | |
Moneysmart adds that the choice between them affects what your premiums cost now and in the future. Some policies also keep premiums fixed for a set time and then change them.
Why the names changed
The new labels came out of a joint review by ASIC and APRA, which began in late 2022 amid concerns that repeated premium increases might not have been applied in line with policy terms or with what policyholders had been led to expect. Their June 2025 letter to life insurers says this about the word “level”.
“The old premium labels (i.e. ‘stepped’ and ‘level’ premiums) failed to clearly communicate that premiums could change. The word ‘level’ – often combined with a written or visual explanation – created a false perception of premium stability.”
ASIC found that people who complained about premium increases, especially those on level premiums, generally believed their premiums would not change, and that insurers’ selling practices had contributed to that impression. The new labels, they wrote, show a difference between the two options while making clear that either may change. So an older policy document, quote or conversation that says “level” is describing what is now called a variable premium, not a fixed one.
What else moves a premium
Age is only one input. Moneysmart says insurers set premiums based on age, health, job and lifestyle. The regulators’ letter describes two more effects on premiums.
- Duration-based pricing. New customers, who have just been assessed by the insurer, are charged less because they are statistically less likely to claim. That effect wears off the longer the policy is held, with matching premium increases.
- Temporary discounts. Insurers may offer discounts to win new business, and these also wear off over time.
- Loadings. A percentage added to the standard premium for people seen as higher risk, such as those in a high-risk job, with a pre-existing condition, or classified as a smoker.
APRA and ASIC said they expect insurers to make people aware at the outset of duration-based pricing and temporary discounts, and how they unwind over the life of a policy. For cover inside super, premiums are generally deducted from your super balance, which reduces retirement savings over time.
Questions Moneysmart suggests asking
- How will premiums change?
- Do they rise with my age or not?
- What other increases could happen each year?
Moneysmart also lists premiums, and how they change over time, among the things to check in the PDS. If you are deciding between the two kinds for your own policy, that is a question about your circumstances, which is what personal advice is for.