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How are life insurance premiums calculated?

Ever wondered how insurers work out your monthly premium?

Most of us want the security and reassurance that comprehensive life insurance cover can bring. However, no one wants to pay more than they have to on their monthly premium.

But how do insurers calculate life insurance premiums and more importantly, how can you make them more affordable?

The cost of your premium is determined by statistics and maths calculations carried out by the underwriters at each insurance provider. Different insurers have different underwriting processes.

Below we have gone into detail on the many different factors that influence the cost of life insurance premiums. We have split them into 2 areas; personal factors and policy factors.

Personal factors that affect your premiums


Height & Weight (BMI)

Find out your Body Mass Index by using the NHS’s online BMI calculator.

Medical history

Family medical history





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Gender (not anymore)

Although age and health are obviously hugely influential factors in the cost of your premium, it is important to understand that all of the above factors together combine to give insurers a picture of the potential risk you present.

Factors that increase the cost of your life insurance premiums, 2018

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Policy factors that affect your premiums

There are 4 key areas that relate to your policy, which all have a major impact on the cost of your monthly premiums:

  1. The level of cover you require (size of pay out)
  2. The type of cover you choose (fixed term or whole of life)
  3. The length of cover (how long the policy term runs)
  4. The type of premium you choose (guaranteed or renewable).

Level of cover

Type of cover

Length of cover

Type of premium (guaranteed or renewable)?

When making a life insurance application it is really important to be completely open and honest. In the worst case scenario failing to reveal key information, such as previous medical conditions, could result in the insurer refusing to pay out.

Reducing the cost of your life insurance premiums:

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