Income Protection - Guaranteed or Reviewable Premiums?
Guaranteed Premiums:
Your insurance company guarantees not to increase your premiums, except for index-linking your policy benefits if your policy has indexation.
If your policy does not have indexation, your premiums will remain the same for the term of the policy.
Reviewable Premiums:
Your insurance company reserves the right to increase your premiums, even if you have never made a claim, if your insurance company has heavier-than-expected claims from their other customers.
A reviewable premiums life insurance policy would typically have an initial period, for example, the first 10 years of a policy, during which the premiums are will not be increased.
However, a reviewable premiums income protection plan usually has a much shorter initial period, for example, 3 years; during which your premiums will not be reviewed. Other reviewable income protection plans have no 'fixed premiums' period at all and premiums could be reviewed every year.
Every time a premium review takes place, your premiums can be increased. (In theory, the premiums of a reviewable policy could be decreased.)
Reviewable premiums would usually be initially cheaper than guaranteed premiums, however, you have no control over the future costs of a reviewable premiums policy.
