Consumers should be made aware of level premiums when taking out life policies, according to TAL Group CEO Jim Minto.

He says most polices are sold on stepped premiums, which have cheaper initial payments.

But consumers “are continuing to voice concerns about rising costs and the pressures of managing their home budgets. We have found that while most people choose stepped premiums for their life insurance, which rise with age, they are overlooking level premiums, which stay the same.”

He says stepped premiums can be better for short-term policies, but consumers seeking cover for longer periods should consider level premiums.

“Level premiums are comparable to fixing mortgage rates, which allow for better household budgeting and planning.

“Australians are familiar with fixing their mortgage rates, but are more reluctant to fix their life insurance premiums, which, in the long run, usually ends up cheaper overall.”

He says the industry must better communicate pricing models for income protection, disability, life and critical illness cover.