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Average Life Insurance Cost in the UK

In 2021, the average cost of life insurance in the UK is £31.77. However, the cost of life insurance can range drastically, from as little as £5, all the way up to £100+. The amount you put towards life insurance can depend on a variety of factors.

If you are fit, healthy, young and have little to no history of any medical issues, then you can likely obtain cover which has a low cost. However, your cover options may reduce and become more expensive as you get older, and naturally obtain ailments as people do with age.

The cost of life insurance in the UK can also drastically differ depending on the insurance company you are looking at, which shows a clear need to do research and look at a variety of providers when looking for cover. There are many mass market comparison sites which you can use, however, not all providers choose to show themselves on these sites, so doing some further research, or using a broker may be the most beneficial.

What Determines the Cost of Life Insurance?

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There are many factors which determine the cost of life insurance for a specific individual. Some of these factors are:

  • Age
  • Health
  • Medical History
  • Smoker/Non-Smoker
  • Type of cover required
  • Level of cover required (sum assured)

These factors will be utilised in a calculator by the insurance provider in order to determine your level of risk to them as an individual. For example, if you’re a smoker with a history of illness, your cost of life insurance is going to naturally be higher than a 21 year old non-smoker with no history of health issues.

In simple terms, the higher your risk of requiring to make a claim, the higher your fee will be in order to achieve cover.In simple terms, the higher your risk of requiring to make a claim, the higher your fee will be in order to achieve cover.

How Much Life Insurance Cover Do You Need?

Another factor to consider beyond your ‘risk’ is the level of cover you actually need, or want. The purpose of life insurance is to provide peace of mind that if the worst does happen, that those left behind will be taken care of. This will be somewhat determined by the lifestyle choices of the potential recipients of the life insurance cover. Would £100,000 be enough, or would they need more?

Here are some factors to consider when deciding how much life insurance cover you may actually need:

  • Consider your Mortgage/Home
    • Do you want your partner/kids to remain living in your current family home? Can they afford the mortgage or cost of living without you?
    • If you rent, can they afford the monthly rental rate without your income?
    • A larger sum could be the difference between your loved ones staying in the family home, or being required to size-down suddenly.
  • Jobs of Recipients
    • Can your family pay the bills without you?
    • Would you want them to take on extra work in order to earn more money to maintain their current lifestyle?
  • Childcare
    • What are your current childcare bills?
    • Would your partner be able to afford the childcare bills (considering other factors too) if you were no longer here?
    • Would you want your children in childcare? With only one parent around, someone needs to take care of the children while your partner is at work.
  • Future of Children
    • Do you want to pay for their University education? Or their first car? A contribution to their first house deposit?
    • General costs as your children grow up, such as new clothes, cost of hobbies, school trips etc
  • Funeral Costs
    • The average cost of a funeral if a burial is just over £4,000 which can take a large chunk out of any inheritance your loved ones may receive. Would you expect your family to pay for this?
  • Any debt
    • Debt will be taken from the estate when you die, so this will reduce the amount that your family may receive from inheritance. Are you okay with this? Or would life insurance cover give you a better peace of mind that they will receive more of your estate?
  • Inheritance Tax
    • Inheritance tax in the UK (2021) is 40% on estates over £325,000. It is always best to talk to a tax expert in order to determine the best way to lay out your affairs to reduce your tax requirement so that your family receives as much of your estate as possible. However, life insurance is not taxable (although can be in some circumstances), so keeping this in mind may give you a bit more peace of mind.

Life Insurance Options

We compare plans from the leading life insurance providers

Overall, the decreasing term life insurance is generally considered to be the cheapest option when looking at life insurance cover. This is because the sum paid out if you were to die reduces over the course of the policy. The idea being that if you die at 95, your partner will require less money than if you were to die young at 40.

The quotes below compare a level term life insurance with a decreasing term life insurance using a non-smoking individual with £100,000 cover:

Age Level term life insurance Decreasing term life insurance
20 £4.55 £4.71
25 £5.28 £4.99
30 £5.84 £5.18
35 £7.92 £6.08
40 £11.42 £7.97
45 £17.37 £10.89
50 £28.82 £17.11

Another option to obtain cheaper life insurance is to look towards joint life insurance. Studies show that a joint insurance policy can be up to 25% cheaper to arrange instead of two single policies. The counter argument here is that a joint policy will result in a singular payout, rather than two if you had separate policies.

The below table depicts the comparison of two non-smokers for a £100,000 cover policy over a 30 year term, when looking at two single policies or a joint policy:

Age Two single policies A joint policy
20 £9.10 £7.34
25 £10.56 £8.20
30 £11.68 £10.27
35 £15.84 £15.10
40 £22.84 £21.49
45 £34.74 £33.31
50 £57.64 £55.58

On average, a smoker pays up to 50% more than a similarly aged non-smoker. Therefore, considering quitting smoking can have a huge determining factor on not only your life expectancy, but the cost of life insurance cover as well.

The below table compares the cost of insurance for a smoker to a non-smoker over a 30 year period and £100,000 cover:

Age Smoker per month Non-smoker per month
20 £5.87 £4.55
25 £7.26 £5.28
30 £9.83 £5.84
35 £14.60 £7.92
40 £22.75 £11.42
45 £36.78 £17.37
50 £60.16 £28.82

The final simple option is whole life insurance, which guarantees a payout and lasts for your whole life. Therefore, due to the guaranteed payout, this tends to be the most expensive form of insurance. The biggest determinant of the cost here is going to be age, but as with other forms of cover, there are many factors that different insurers will take into consideration. As a comparison, a 30 year old will pay up to 640% more for whole of life insurance when compared to the equivalent mortgage life insurance.

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