life insurance cost in UK

How Much Does Life Insurance Cost UK

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Life insurance provides financial protection and safety for your loved ones in the event of your death. It pays out a lump sum to your beneficiaries if you pass away during the term of the policy. This money can help cover funeral expenses, outstanding debts, daily living costs and future expenses for those left behind. When considering life insurance, one of the first questions is usually about cost. So how much does life insurance cost in the UK? There are several factors that affect the cost of life insurance premiums.

Types of Life Insurance

There are two main types of life insurance in the UK – term and whole of life. 

Term Life Insurance

Term life insurance provides cover for a set period of time, such as 10, 20 or 30 years. This is the most fair type of life insurance. Premiums are based primarily on your age and health at the time the policy begins. Premiums are lower for younger, healthier individuals and higher for older individuals or those with medical conditions. Term life policies only pay out if you pass away during the term. After the term expires, coverage ends unless renewed. This type of temporary protection is useful for covering needs like mortgages, debts and education costs.

Whole of Life Insurance 

Whole of life insurance provides lifelong coverage. As long as you continue paying premiums, cover lasts for your entire lifetime. This type of permanent protection helps ensure funeral costs, inheritance tax and other expenses are taken care of no matter when you pass on. Premiums are more dear than term insurance since coverage is lifelong. Costs are based on age at the time you take out the policy. Whole of life insurance also builds up a cash value that you can borrow against or withdraw during your lifetime.

Factors That Determine Cost

Many factors determine how much you’ll pay for life insurance coverage, including:


Age is the most significant factor in determining premium costs. Life insurance cost are based on life expectancy. Younger people typically have a longer life expectancy and therefore lower premiums. Older individuals represent a higher risk to insurers, so premiums are higher. Rates increase incrementally as you age. Getting coverage when young secures lower premiums over the long run.


Gender also plays a role in premium pricing. Statistically women tend to live lenghty than men. This means women often pay lower premiums than men of the same age for identical coverage. However, some insurers do not differentiate premiums by gender due to equality legislation.


Your health at the time of application also affects premium costs. Individuals with medical conditions, a history of illness, or who engage in risky hobbies may pay higher rates. Most policies require a medical exam or questionnaire to determine rates. Those with significant health issues may be declined coverage or asked to pay higher premiums due to the increased risk. Good health keeps prices lower.


Certain lifestyle factors like smoking, high-risk hobbies, alcohol use, drug use and family medical history can increase your premiums. Insurers charge higher rates for those more likely to make claims due to lifestyle risks. Leading a healthier lifestyle keeps premiums down.

Coverage Amount

The amount of coverage you choose also impacts the cost. More coverage means higher benefit payouts in the event of your death, so premiums are higher. A policy with £250,000 in coverage will cost more than £150,000 in coverage for the same individual. Opting for additions like critical illness or disability riders will also increase premiums.

 Policy Type

As mentioned, whole of life insurance costs more than term insurance. This is because whole life coverage lasts for life, while term coverage expires after the policy term. Whole life accumulates cash value and premiums remain constant over your lifetime. Term life premiums start low but increase with age as you renew the policy.

Payment Frequency 

Paying annually rather than monthly saves on interest charges and administrative fees. This keeps the total costs lower over the long run. Paying premiums in one annual lump sum results in the lowest overall premiums.


Rates can vary between different insurance providers. It pays to compare quotes from multiple insurers to find the best value. Some insurers offer discounts for bundled policies or loyalty which can provide savings.

Average Cost of Life Insurance by Age

While individual factors impact pricing, some general guidelines on average life insurance rates by age are:

Age 20-29: £7-£15 monthly (£84-£180 annually) for £250,000 of term coverage

Ages 30-39: £10-£35 monthly (£120-£420 annually) for £250,000 of term coverage  

Age 40-49: £20-£85 monthly (£240-£1,020 annually) for £250,000 of term coverage

Ages 50-59: £50-£170 monthly (£600-£2,040 annually) for £250,000 of term coverage

Ages 60-69: £100-£500 monthly (£1,200-£6,000 annually) for £250,000 of term coverage

Keep in mind these are rough estimates only. Actual premiums depend on specific circumstances. Whole life insurance averages £20-£100 per month for 30 year olds and rises from there. Seeing sample quotes tailored to your situation gives the most accurate rate estimate.

How Insurers Calculate Premiums

Insurers use your age, gender, health, lifestyle and other risk metrics to estimate how long you will live. Actuaries determine statistical mortality rates and life expectancy. The greater the odds of passing earlier, the higher the insurance risk and premiums.

Risk is categorized into different “bands” based on factors like age or health. Lower risk bands receive lower premiums, while higher risk bands pay more. Insurers price policies at a level that covers potential payouts for each risk band over time plus administrative fees and profit margins.

The goal is to collect enough in premiums from each risk group to pay claims and expenses while making a profit. Calculating the right premium levels is crucial for the insurer’s financial stability.

How Much Coverage Do You Need?

Determining adequate coverage for your needs is key when budgeting for life insurance:

Income replacement:  Many aim for 10-15 times annual income in coverage to maintain the family’s lifestyle after income loss. Spousal income, other assets and projected costs factor in.

Final expenses: Typically £10,000-£15,000 to cover immediate funeral and burial costs.

Mortgage payoff: Enough coverage to pay off your outstanding home loan keeps the family in their home if you pass away.

Education funds: £80,000-£100,000 can provide for a child’s future university costs in your absence.

Debt coverage: Total outstanding debts like credit cards, loans, medical bills, etc.

Determining an appropriate level of cover ensures loved ones are financially secure even if you’re not there to provide for them. It’s worth investing in enough life insurance protection to meet their needs. From there, you can compare policies and premium costs.

Ways to Save on Costs 

There are several strategies for keeping your life insurance premiums in budget:

Buy when young and healthy: Lower rates apply to younger individuals with fewer health risks. Buying early saves money over the long term.

Choose term life insurance: Term life provides the most cost-effective temporary coverage for 20-30 years during peak needs.

Select annual over monthly payments: Paying annually reduces administrative fees and interest costs compared to monthly premiums.

Improve health and lifestyle: Keep premiums low by maintaining a healthy weight, quitting smoking, reducing alcohol use and leading an active lifestyle. 

Bundle policies for discounts: Some insurers offer multi-policy or loyalty discounts for bundling other insurance products like home or auto.

Raise deductibles: Choosing a higher benefit deduction before payouts start can reduce premiums. However, this means smaller payouts for beneficiaries.

Limit riders: Extra options like disability add-ons increase premiums. Stick to base coverage you need rather than unnecessary extra benefits.


The life insurance cost in UK varies depending on the type of policy, the amount of coverage desired, and personal factors like age and health. However, quality life insurance can generally be obtained for reasonable premiums if shopped and compared properly. Getting quotes from multiple providers is advised to find the best value.

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