How your insurance premiums are calculated

The amount and types of cover you have decided to include in your insurance will play a key role in what you are charged. You may have a combination of cover types, including life cover, income protection and total permanent disablement (TPD) cover. For more information on the different types of life insurance cover, see our previous article here.

You will also be insured for a certain amount under the benefits you’ve selected, and in the case of income protection and business expense cover, you will have a set waiting period before you can receive benefits, and a set time that you will be able to receive those benefits.

You may also have selected some optional add-on benefits as part of your cover, which may affect the price of your premium.

A range of factors about your personal situation can also affect your premium. As you get older the risk of you contracting a serious illness increases, so your premiums will be higher with age, unless you’ve chosen the variable premiums option.

Factors such as your gender, general health, whether you smoke, your occupation and lifestyle will be taken into account when calculating the premium price.

When you take out life insurance, you are able to choose the premium type that best suits your needs. You can choose from variable age-stepped premiums (previously known as stepped premiums) – where your premiums are recalculated each year based on your age – or variable premiums (previously known as level premiums), where your premiums do not increase due to age (up to age 65). However, if you choose variable premiums, your premiums can still increase for other reasons, such as indexation with inflation.

Variable premiums are likely to be higher when your cover begins compared to variable age-stepped premiums.

Whether you pay your premiums monthly or annually will also affect how much you pay. If you choose to pay on a monthly basis, you will need to pay an extra administrative loading to cover the cost to the insurer of collecting your premium more frequently.

Insurance sales duties imposed by state governments should also be included as part of your premium costs, either as part of your base rate or as an additional charge. These taxes may vary depending on where you live.

For more information on how your life insurance premiums are calculated, take a look at our latest ClearView ClearChoice PDS .

This article is prepared by ClearView Life Assurance Limited (ABN 12 000 021 581, AFSL 227682) (ClearView). The information is general in nature, it does not take into account your objectives, financial situation or needs. Before determining whether to apply for or hold the product(s) you should read the Product Disclosure Statement and Policy Document (PDS) and consider the appropriateness of the product(s) to your circumstances. A copy of the PDS can be obtained by calling us on 132 979 or on our website at www.clearview.com.au/pds-and-brochures. Information about the Target Market Determination(s) for this product(s) is available at www.clearview.com.au/tmd. ClearView ClearChoice is issued by ClearView. ClearView ClearChoice Super is issued by HTFS Nominees Pty Limited ABN 78 000 880 553, AFSL 232500, RSE Licence L0003216 as trustee of HUB24 Super Fund, ABN 60 910 190 523, RSE R1074659. All benefits are paid in accordance with policy terms and conditions. Premiums, regardless of premium type, are not guaranteed and may be increased or decreased in the future. Please refer to the ‘Premiums and Other Costs’ section of the relevant PDS for more information. This information does not in any way constitute tax, legal or health advice. Before relying on this information, you should seek independent expert advice. Whilst ClearView have taken all care to ensure the information in this document is accurate and reliable, to the extent the law permits, we will not assume liability to any person for any error or omission in the document however caused. ClearView can vary or withdraw this document at any time. You should always check with ClearView to confirm that this article is up to date. This article is current as at the date of publication. Variable age-stepped premiums are premiums that generally increase due to age and can also increase due to changes in your benefit amount insured (e.g., under the Indexation Benefit) or a premium rate review. Variable premiums are premiums that will not increase due to age but can increase due to changes in your benefit amount insured (e.g., under the Indexation Benefit) or a premium rate review.