What is the average cost of life insurance in the UK?

A woman with a green backpack looking at the green scenery

The cost of an average life insurance policy in the UK depends on many unique factors such as your age, lifestyle, overall health and occupation, amongst many others. But the actual cost of a life insurance policy, to quite an extent, depends on your choices. 

The cost of a life insurance policy will vary depending on which stage of life you are in and your overall financial situation.

How much cover do you need?

The level of cover you need and your personal circumstances influence the amount of money that you need to pay every month for your life insurance. As we mentioned earlier, there are many other factors that determine the cost of your monthly premiums.

  • The type of policy
  • The level of cover you need
  • The term or length of the life insurance policy
  • Your health
  • Your age
  • Your lifestyle – which also includes whether or not you smoke

There are many online calculators which will help you to understand how much life insurance cover you actually need and how much it’s likely to cost you. 

Different costs for different types of insurance

When you apply for a life insurance policy or express interest in one, the first question that you will be asked is what type of  insurance policy you want. Generally, the options that you have depending on the cover are increasing term, level term and decreasing term policies.

If you are concerned about how much an insurance policy may cost you, deciding between these three types of policies will make a huge difference to the overall cost of the policy. 

Decreasing cover

If you have a mortgage to repay, decreasing term cover is an ideal choice for you. The pay out that you receive from the policy decreases with time just as the debt will decrease over time too. 

If we compare the costs of premiums that are payable for the three types of policies mentioned above, the lowest premiums need to be paid on a decreasing term cover policy. This policy is generally bought by those who have debts to repay. Though you must remember that it is suitable for only those debts that decrease over time such as a repayment mortgage or loans, which do not have interest rates higher than 7 percent. 

Level cover

Unlike a decreasing cover policy, a level term cover doesn’t provide regular repayments. Instead it pays out a lump sum of cash to your beneficiaries upon your death. 

This money can be used to maintain their standard of living, settle debts or to spend in whichever way they like. If you want your life insurance policy to cover an interest only mortgage or to pay out a lump sum of cash to your family, this type of life insurance would be suitable for you.

Increasing cover

Inflation is generally not considered in the case of most insurance policies when it comes to payout. It is common knowledge that the amount that you receive as a pay out in one particular year may not be sufficient to fulfil your needs if you were given the same amount of payout several years later.

Increasing term cover takes care of this concern and increases its payout alongside inflation. In this way, the amount that you are liable to receive as payout is protected against the effect of inflation over a period of time. 

As you may have already guessed, if you buy an increasing term cover life insurance policy, you have to pay the highest monthly premiums as compared to the other two types of policy. 


An important point to note here is that the actual cost of a premium will be largely determined by the circumstances and needs of an individual. It is quite possible that a person’s increasing term policy may have lower monthly premiums than another person’s decreasing term policy. 

When it comes to level and decreasing term policies, the amount that needs to be paid as a monthly premium remains consistent throughout the term of the policy. 

There are other policies as well that require a person to pay higher premiums as time passes. But these policies can prove to be extremely expensive in the long term. It is true that you have to pay low premiums initially, but paying higher premiums in old age, when you actually need money, may not be suitable for the circumstances of many people.

How to calculate your premiums?

When you are about to apply for a life insurance policy, there are two choices that you have. 

First, you can decide how much you can afford to pay each month and multiply it by the duration of the policy to get an estimate as to how much you are investing and how much you will receive in payout. 

Or secondly, you can make the payout itself the basis on which you decide which policy you should buy.

In the latter case, you can decide the amount of payout, which, according to your estimate, would suffice for the needs of your loved ones after your death and buy a policy accordingly. The insurer will then make calculations to spread the cost of life insurance over monthly premiums.

Since it is impractical to try to determine how much a life insurance policy costs on average for everyone, to get an estimate regarding the cost of a life insurance policy which would be right for you, we need to assess the individual circumstances and personal needs that majorly influence the cost.

Some of the most common considerations include your cost of living, your mortgage, the size of payout you expect, the type of insurance, your saleable assets and your existing savings. Generally, if you buy a policy which requires you to pay lower monthly premiums, the payout will certainly be low too.

Possibly one of the biggest determinants of the cost of a life insurance policy is the level of risk that the insurer associates with the policy holder. Thus, the greater the risk, the higher the premiums.

Average cost of life insurance

As we mentioned earlier, it is difficult to arrive at an average cost of a life insurance policy. The primary reason for our inability to do so, is the fact that the needs of each individual differs greatly from each other. For example, the needs that you presently have are certainly different from those of your children or parents. But it is quite possible that you may both need the same type of insurance policy.

Insurers generally take the following factors into consideration when determining your overall health and risk involved:

  • Height
  • Age
  • Weight
  • Status as a non-smoker or smoker
  • The medical history of your family
  • Concerns relating to your lifestyle such as alcohol consumption
  • Pre-existing medical conditions
  • Whether or not you have been diagnosed with mental health issues

This is not the complete list and different insurers may have different criteria to evaluate the level of risk that you pose to them as a policy holder. Different insurers ask different questions and have different levels of scrutiny involved in their profiling of policyholders.

What you do for a living also plays an important role when it comes to the risk that you carry.

If your job requires you to work in dangerous environments such as around explosives, wild animals or underwater, you will naturally be liable to pay a higher premium amount compared to those having a low risk job such as a primary school teacher or office worker.

Another factor that can affect the estimate of your life insurance policy is the status of your employment. As a self employed individual, your personal situation may not be entirely clear to the insurer and it may also be difficult for you to obtain a high credit score.

How you can make a difference to the approximate cost of your life insurance policy

The only way in which you can reduce the monthly payments that you make towards your life insurance policy is to make some projections for the future, specifically the time at which you will buy the policy. 

For instance, if you have been a smoker throughout your adulthood but have quit smoking just a week prior to the visit to the insurer, it is very unlikely that it will help you lower your premium amount. You should be smoke free for a period of at least one year so that your insurer places you in the category of a non smoker. It should be noted that smoking includes nicotine products such as e-cigarettes and nicotine patches as well.

A similar logic is applicable to all lifestyle habits. For instance, if you were to lose weight or cut down on your alcohol consumption, the amount that you will need to pay as a premium will certainly be lower than what you would have paid had you not made those lifestyle changes. 

Since it is extremely difficult to make changes to premium amounts once the policy has been taken out, it is advised that you make these lifestyle changes beforehand to lower the cost of your life insurance policy.

The cost of a life insurance policy will vary depending on which stage of life you are in and your overall financial situation. If you are considering buying a life insurance policy, it is advisable to get professional guidance before you commit to anything.

Save Money on Life Insurance Today

Who is the cover for?

   Just Me Me & My Partner
Leave a Reply

Your email address will not be published. Required fields are marked *

You May Also Like