Written by · Reviewed by Smiths Insurance & KiwiSaver — licensed Financial Advice Provider (FSP712931) · Last updated 2026-10-20

How level premium life insurance works in New Zealand

Level premium life insurance is a policy where the premium does not rise each year because you are older, for a set period such as the term of the policy, to a stated age, or for 10 years. It starts higher than a stepped premium. It does not freeze everything: insurers keep contractual rights to change rates for changes in law, tax or claims experience, and many level periods end with a switch to stepped premiums.

In short

This page is about what is and is not fixed. For the cost comparison between the two structures, see stepped versus level premiums and the crossover discussion. For funeral products, read level premium funeral cover.

What is a level premium?

A level premium is a premium that does not increase with your age during the level period. Fidelity describes the two main structures on its life cover page (Fidelity Life, retrieved 20 October 2026): with Yearly Renewable Term "your premium increases each year based on things like your age, gender, smoker status and your amount of cover", and with Level Term "the amount you pay remains the same for the term of the policy".

Asteron Life uses the same idea: level premiums "lock your premium payments in, so they don't increase with age", while stepped premiums "start lower... but increase each year based on your age at that time" (Asteron Life brochure). The Financial Markets Authority warns that "policies that are cheaper initially can be more expensive long-term" and that most premiums go up annually based on age or inflation (FMA, updated 28 September 2026).

How do the main insurers word it?

Insurer Level option What the wording says
Fidelity Life Level Term Amount stays the same for the term of the policy
Asteron Life Level premiums Do not increase with age
AIA Level for 10 years, to 65 or to 80 After the level period the premium converts to Rate for Age; underlying rates guaranteed "subject to relevant changes in taxation or legislation" for Life Cover, Family Protection and Accidental Death
Chubb Life Review periods of 1, 5, 5 with 5% steps, 10 years, or to 65, 70, 80 or 100 Recalculated at the end of the period on sum insured, age and "changes to Chubb Life's protection premium rates or relevant laws"
Momentum Life Quick Life Stepped to 75, then fixed Set each anniversary for age, gender and smoking status until 75, then fixed
Momentum Life Funeral Insurance Level until the 89th birthday Premiums stop at the 89th birthday and cover continues for life

Sources: Fidelity Life, Asteron Life, AIA Living umbrella wording v8, effective 12 May 2026, Chubb Life brochure, and the Momentum wordings. This table shows structure only. It is not a ranking and has no prices.

Does a level premium stay fixed for life?

Not necessarily. Four things limit the word "fixed".

  1. The level period can end. AIA's level options run to a stated age or for 10 years and then convert. IFSO published a case where a policy "level to age 80" converted to Rate for Age at 80 and the monthly premium went from $49 to $190. The complaint was not upheld (IFSO: Increasing premiums). That is one case, not a typical increase.
  2. The insurer can change rates in defined circumstances. AIA's wording ties its guarantee to changes in taxation or legislation. Momentum Life's Funeral Insurance wording says it can change premiums for everyone on a plan for a change in tax or other law, or for claims experience significantly different from expected, on 30 days' written notice. Chubb recalculates at the end of a review period for changes to its rates or relevant laws.
  3. The amount of cover can change. A premium is set for a sum insured. If your cover is indexed or increased, the amount grows, and Fidelity lists the amount of cover as a premium factor. Momentum Life's Quick Life raises the benefit 3% a year to age 75 unless you opt out. AIA's CPI Linked option raises the benefit each year by the change in the consumers price index.
  4. Other changes you make. Adding benefits or changing smoker status can change the premium, depending on the policy.

The point is simple. A level premium removes the yearly age step for the stated period. It is not a promise that your payment will never change.

How does the price compare with stepped premiums?

We have no single sourced figure. The QuoteHub Premium Index prices stepped premiums only, and it has no level comparison. What the insurers say is that level premiums start higher, which is why a reader sees them cost more in the early years. Whether the extra early cost is repaid depends on how long you keep the policy, how rates change, and your health and smoker status. We do not give a crossover age or a yearly percentage because no source we hold publishes them.

A simple check you can do yourself uses round numbers. Say a level-rate policy cost $1,200 a year and an insurer raised the rate table for its whole class by 10%: it would then cost $1,320 a year. That is arithmetic with made-up numbers, not a prediction. It shows why the rate-change clause matters even when the age step is gone.

Who might a level premium suit, and who not?

May suit: someone who wants to know their cost for a defined period, who expects to hold the policy for many years, and whose budget would struggle with yearly rises.

May not suit: someone whose need will fall soon, such as a mortgage that will be repaid in a few years, who can use a smaller or cheaper cover and review it. Someone who cannot afford the higher starting premium may do better with stepped premiums and a plan to review.

Neither choice is better as a fact. Our is life insurance worth it page covers the broader value question, and do you need life insurance for a mortgage covers debt-driven cover.

Questions to ask before you choose level

Always answer health questions completely. IFSO case notes show insurers avoiding or reducing claims for non-disclosure (IFSO).

Where Momentum Life fits

Momentum Life's Funeral Insurance has a level premium until the 89th birthday, for ages 40 to 75, with acceptance guaranteed and a fixed benefit of $3,000 to $30,000 towards costs. In the first 24 months it pays only for accidental death; any other death in that window pays no benefit and all premiums are refunded. Total premiums can end up larger than the benefit, and the benefit may not cover the whole funeral. Quick Life, its guaranteed acceptance life cover for ages 18 to 65, uses stepped premiums to 75 and excludes pre-existing conditions and suicide for the first 2 years. A healthy person can usually get more cover for less with fully underwritten cover through an adviser. See Quick Life and Funeral Insurance. Momentum Life's A.M. Best rating is B (Fair); see Momentum's financial strength page.

Advice is provided by Craig Smith Business Services Limited, trading as Smiths Insurance & KiwiSaver, a licensed Financial Advice Provider (FSP712931). This is general information, not personal advice. QuoteHub is a Momentum Life partner, and Smiths Insurance & KiwiSaver may receive a commission if you buy through our link; see how we are paid. Compared: Fidelity Life, Asteron Life, AIA, Chubb Life and Momentum Life, on premium structure, as at 20 October 2026, from published documents. Not every New Zealand insurer is included. This is one adviser's reading, not a score.

Frequently asked questions

Do level premiums increase?

Not with age during the level period. They can change if the insurer exercises a contractual right, such as a change in law, or when the level period ends.

Is level premium life insurance more expensive?

Insurers describe level premiums as starting higher than stepped ones. We have no sourced comparison of totals over time.

What does "level to age 65" mean?

It means the age-based step is removed until 65. Check what happens at 65 in your policy wording.

Can I switch from stepped to level?

We have no sourced answer on switching terms. A change of premium structure may involve new underwriting, so ask the insurer or an adviser about your policy.

References

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