How much does life insurance cost in the UK?
The cost of life insurance in the UK depends on several factors; the type of life insurance you need, be it term, whole of life or guaranteed; your age and depending on the cover, your health and lifestyle. Therefore, understanding how they work and the associated costs is key.
The following information will help you understand:
- What is life insurance and the types of life cover available
- The average cost of life insurance
- What affects the cost of life insurance
- How much life insurance cover you need
What is life insurance?
Life insurance often referred to as life assurance or life cover pays out a cash lump sum upon the death of the person insured. Designed to protect your family against the risk of you dying within the term of the plan, life insurance provides financial security should the worst happen.
A life insurance policy is there to help family life continue where possible as before, guarding against the impact of both the loss of income coming into the home and the support. Perhaps by helping to:
- Pay household bills and living expenses
- Cover the mortgage or pay off outstanding loans
- Pay for childcare or education
- Help towards funeral costs
It is worth thinking about your own personal reasons for buying life cover though as your requirements will dictate which is the best type of life insurance for you.
Average life insurance cost UK
The average life insurance cost will depend on the type of cover you require. The price you pay each month will also be influenced by the following:
- The amount of cover you need
- How long you want the life insurance for (if term life insurance)
- How much you are happy paying a month
- Your age
- The state of your health (depending on the plan)
- Your lifestyle including any hobbies or dangerous sporting activities
Types of life insurance
The are many types of life insurance available in the UK however in general they fall into one of two categories, namely Term Life Insurance or Whole of Life Insurance. Both options pay out a cash sum when you die but the way the insurance cover works is very different.
Term life insurance
Term Life insurance provides cover for an agreed number of years; perhaps whilst the children are growing up or the mortgage is being paid. Once the agreed number of years, or ‘term’ as it is known ends, the policy stops and no money is paid out.
Depending on your requirements, you can choose between:
- level term insurance
- Increasing term insurance
- Decreasing term insurance
Our guide to life cover will provide more information on each of the options.
Whole of life insurance
Whole of life insurance provides life cover for the whole of your life; this means that providing you abide by the terms and conditions of your policy; a cash sum will be paid out when you die. Because of this certainty, this type of life insurance is usually more expensive.
Guaranteed over 50 life insurance
Guaranteed over 50s life insurance is a whole of life insurance plan, so a cash sum is guaranteed to be paid out when you die however the difference with this type of plan is that you are also guaranteed to be accepted when you apply, with no questions asked.
As long as you are a UK resident within the age threshold, you will be accepted regardless of the state of your health or lifestyle. As a result, guaranteed over 50 plans are simple to apply for but the cover is lower than with a regular whole of life plan.
How much is life insurance?
To find out how much life insurance costs, you can use one of the many free life insurance calculators available on the internet. It’s important to compare life insurance quotes with several providers though as the amount of life cover you can get for your money will vary.
How much does £100,000 life insurance cost? Answer £11.36 a month
How much does £250,000 life insurance cost? Answer £21.96 a month
How much does £500,000 life insurance cost? Answer £42.82 a month
The above examples are based on a non-smoker in good health age 45 living in London and provided by Vitality for term insurance over 20 years.
What affects the cost of life insurance?
The type of plan you choose affects the cost of life insurance, as does the amount of cover you require however in addition to your age and medical history, insurers will also want to know about your occupation, smoking status, how much you drink and your family’s medical history too.
The insurer is wanting to understand the risk, so the younger and healthier you are, the less you will pay – as long as you aren’t into bungy jumping or skydiving of course.
Life insurance for smokers
Life insurance for smokers will cost more than for non-smokers but you are eligible, so it is still worth considering. As the amount of life cover you can get as a smoker will vary, it is worth comparing quotes to get the best life cover for your money.
Some Guaranteed over 50 life insurance providers don’t differentiate between smokers and non-smokers; so if you’re interested in an over 50s plan, it would be worthwhile seeking out the companies that don’t ask if you smoke, as their rates may be better than those that do.
At what age should you buy life insurance?
You can buy life insurance at any age however your age will probably dictate the type of insurance you choose. For example, a young couple may choose decreasing term life insurance to cover the mortgage, whereas a 60-year-old may want whole of life to leave money to family.
People buy life insurance for many different reasons but essentially it is all about protecting the family, which is why it can be important at any age.
How much life insurance do I need?
How much life insurance you need will depend on your own personal requirements. For example:
- Do you have a mortgage?
- Is there a need for childcare expenses?
- Are you paying for private education?
- Do you have any loans or debts?
- What are your monthly outgoings?
- Are you wanting to leave money for family?
- Do you want to help with funeral costs?
In addition to taking the above into consideration, when working out how much life insurance you need, you must also take into account what you can afford.
Is life insurance worth it?
Life insurance maybe worth it if you want to protect your family and ensure they remain financially secure should the worst happen, however it’s important to choose the right type of life cover suitable to your own personal needs, with a monthly premium you are comfortable paying.
What should I do now?
If you want further information about life cover, take a look at our Compare Life Insurance section, or to understand more about individual providers, go to our life insurance reviews.
Or if you are ready to get some quotes to compare please complete the short form here.