How much should life insurance cost per month on average?

There are many misconceptions surrounding life insurance. One of the most common is how much should life insurance costs per month.

According to the insurer SunLife, 47% of people in the UK are not able to answer; how much is life insurance?[1].

What’s more, a report by Pacific Re suggests people overestimate the cost of premiums on average by a staggering +394%[2].

These misconceptions could help explain why less than 50% of us don’t have any form of life cover. This cover gap, unfortunately, leaves many families in the UK financially vulnerable.

How would your loved ones pay the mortgage each month or meet future living costs if you were no longer around?

Average cost of life insuranceAverage cost of life insurance cover

In reality, your life insurance cost on average is heavily dependant on your individual circumstances. The above £30.40-a-month figure could actually be as little as £6-a-month if you’re young and healthy.

Let us help you by running through what to look out for to ensure you never pay over the odds for your life insurance cover.

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10 key factors which affect the cost of your premiums

Before establishing how much the average life insurance costs each month you need to understand the key cost factors:

  1. Your age – The younger you are when you take out a policy, the cheaper your premiums
  2. Amount of cover – The greater the cover amount, the higher your premiums
  3. Length of the term – The longer the policy term, the higher your premiums
  4. Type of life insurance – The type of policy you take out affects cost. For example, decreasing term cover, where the cover amount decreases over time, will be cheaper than whole of life insurance
  5. Health – If you have or have had any medical issues, such as diabetes or cancer, this will increase your premiums
  6. Weight / BMI – If you are overweight your premiums will increase
  7. Smoking status – If you smoke this will increase the cost of premiums
  8. Alcohol consumption – If you regularly consume high levels of alcohol this will increase premiums
  9. Lifestyle – If you regularly take part in extreme sports, do a dangerous job or regularly travel to dangerous countries this impacts premiums
  10. Family medical history – Even if in good health if there’s a history of hereditary illness this can increase premiums.

(Please note: When insurers work out the cost of your life insurance premiums they look at many different factors; however the above are the key points).

The cost of £100,000 worth of life insurance coverThe cost of £100,000 worth of life insurance

The type of life insurance policy you choose

Did you know that the policy type you choose has a major effect on how much life insurance costs?

There’s a difference between life insurance, which pays out if you die and life assurance, which pays out when you die.

Term-based life insurance options only pay out if you die during the policy term. Therefore, you can outlive your policy, hence there’s less risk posed to the insurer and thus lower premiums.

Life assurance policies pay out when you die and are not term-based. As a result of a pay out being guaranteed, premiums usually cost more than term-based cover as the insurer knows they have to pay out.

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Joint life insurance vs 2 singles policies

If you form one half of a couple, you may want to consider a joint life insurance policy.

The main advantage of a joint policy is that it’s usually around -25% cheaper compared to the combined premiums of 2 single policies.

Whilst a joint policy is significantly cheaper, it’ll only ever pay out once (usually on the first death). In contrast, 2 single policies will offer 2 separate pay outs – double the coverage.

Also, if you have a joint policy and one of you passes away, it then leaves the remaining partner to either find a new policy when older (higher premiums) or be left without cover.

The cost of a joint life insurance policy vs 2 singlesThe cost of joint life insurance vs 2 singles policies

Fixed or reviewable premiums

When you take out a life insurance policy you usually have the option of paying either a fixed or reviewable premium.

Fixed premiums are, as the name suggests, ‘fixed‘ throughout the policy term. You know exactly what you have to pay each month and can budget accordingly.

Reviewable premiums are commonly cheaper initially, but the insurer has the right to increase the cost at certain points during the policy.

As a result, reviewable premiums can often end up being more expensive in the long-run.

Life insurance calculator

When wondering how much life insurance should cost it can be tempting to use an online life insurance calculator.

While these are readily available and usually simple to use, as discussed there are a huge number of factors which can affect the cost.

Online life insurance calculators are usually relatively basic, not taking into account much data and therefore, are unlikely to provide a true picture of how much your cover will cost.

This can set unrealistic expectations when applying for a policy, as well as creating disappointment when the true cost is quoted.

To obtain a true cost of life insurance for you, it’s best to get in touch with a specialist.

Whilst you can go directly to a specific insurer, your average life insurance premium can vary between providers.

The most reliable way of getting a no obligation, free quotation for how much life insurance will cost, whilst obtaining the best deal, is to use an FCA regulated broker.

Compare life insurance quotes, (to secure the best deal)

As you can see above there are many factors which influence how much life insurance should cost per month?

However, even after you’ve determined the amount of cover you need and the most suitable policy type, that isn’t where the process ends.

The key to finding the perfect policy is to compare multiple quotes as the cost of premiums vary. Costs vary because insurers employ different underwriting methods – don’t assume all prices will be the same.

There are 3 common ways in which you can compare life insurance quotes:

  1. Carry out the research yourself online, (however this can be both frustrating and time-consuming)
  2. Use a comparison website, (although usually, they don’t compare all the available providers)
  3. Ask an FCA registered life insurance broker to compare all the major insurers on your behalf.

The value of using a broker

At Reassured, we love helping people secure the right policy, at the best price – it’s what we do. Let us help you save valuable time and money.

What’s more, we can guide you through the lengthy (and often mind-numbing) application process, unpicking any insurance-jargon you may not understand.

Even if you already have life insurance in place but didn’t carry out quote comparisons it may benefit you to switch policies. Again, a broker can help.

We also offer a dedicated in-house trust team who can help you write your life insurance into trust.

By doing this you could avoid paying 40% inheritance tax on your pay out, ensuring your loved ones fully benefit from your investment.

And the best bit about our award-winning service, it’s completely free to use.

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