Level Premium

In insurance, the term level premium refers to insurance the premium for which remains the same across the full insurance term.

In this way, level premiums differ from stepped premiums, which increase or decrease at intervals throughout the insurance term.

Example of a level premium:

You take out a term life insurance policy which has a 20-year term and a level premium of 1000 Swiss francs per year. Throughout the full 20-year term, you will always pay 1000 Swiss francs per year for the life insurance. The total combined cost of the life insurance over the full term comes to 20,000 francs.

Example of a stepped premium:

You take out a life insurance policy with a 20-year term. The policy has a low 200-franc premium for the first year of insurance. The premium increases by 100 francs every year across the insurance term. The total combined cost of the life insurance over the full term comes to 23,000 francs.

More on this topic:
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