What is a life insurance premium?

In simple terms, a life insurance ‘premium’ is the sum of money you’ll pay each month in return for your cover.

You’ll need to keep up to date with your premium payments in order to keep your cover valid.

Upon your passing a ‘sum assured’ or ‘benefit amount’ will be paid out to your loved ones.

If you fail to keep up to date with your payments, your policy will become invalid, and your premium payments will be wasted.

To ensure you’re locking in an affordable life insurance premium, why not compare quotes through Reassured?

We work with a panel of some of the UK’s best life insurance providers to help you find the best available deal we can offer.

Our FCA-regulated service can provide you with personalised, fee-free and no-obligation quotes.

Watch our short video on life insurance premiums and how they are calculated:

Life insurance premiums through Reassured start from just 20p-a-day although the exact price you pay will be influenced by key factors such as:

  • Age
  • BMI
  • Smoking status
  • Medical history
  • Mental health
  • Family medical history
  • Substance use
  • Occupation/Hobbies
  • Travel

How are life insurance premiums calculated?

The cost of your life insurance premium is calculated using statistical analysis and mathematical equations carried out by underwriters.

The factors that affect the cost of your life insurance premium can be broken down into two categories:

  1. Personal cost factors »
  2. Policy cost factors »

If a high-risk factor is identified, insurers may increase the price of premiums to compensate for the heightened risk.

This is often referred to as premiums being loaded or hiked.

Every insurer uses a slightly different methodology, which is why it’s so important to compare multiple quotes as prices can vary significantly.

Keep reading as we look into these factors in greater detail and explain how they affect the price that you pay for your life insurance…

Personal factors that affect your premium

1) Age

As a general rule, the younger you are the lower your premium.

This is simply because the older you are, the shorter your life expectancy, meaning you pose a greater risk to the insurer as it’s more likely that a claim will be made.

The table below shows how the price you pay for your premium can vary based on your age.

Quotes are based on a non-smoker, who is in good health:

AgeLevel term life insurance (with a 20-year term and £100,000)
20£3.55
35£5.77
50£16.89


The best way to secure the cheapest price is to take out life insurance as a young adult. This enables you to lock in the cheapest possible premium.


2) BMI

Body Mass Index (BMI) is calculated using your height and weight to determine whether you're a healthy proportion.

Being overweight brings with it an increased risk of a number of health complications such as heart attack, type 2 diabetes and high blood pressure.

Many of these hypokinetic conditions bring with them potentially fatal implications and as a result, present a higher risk to the insurer.

Equally, if the applicants BMI is too low (usually below 16), your premiums will also be loaded.

Why not use our handy calculator to work out your current BMI?

Body Mass Index (BMI) calculator

Use our simple calculator to work out your BMI and discover the most likely outcome of your life insurance application based on your reading.

Less than 18.5 = Underweight

Between 18.5 - 24.9 = Healthy Weight

Between 25 - 29.9 = Overweight

Between 30 - 39.9 = Obese

Over 40 = Morbidly Obese

Please fill in the required fields

3) Smoking

It’s no secret that smoking shortens your life expectancy, therefore, it's not surprising that smoking increases the cost of your life insurance premium.

This is due to the increased risk of contracting a serious disease such as lung or throat cancer. As a result, the insurer mitigates their risk by loading premiums for smokers.

It's not uncommon for a smoker's life insurance premiums to be twice that of a non-smoker for the same level of cover so, if you’re a smoker, it’s even more important to compare quotes to find the most favourable rate.

The table below shows the price difference between a smoker and a non-smoker.

Quotes are based on an applicant in good health for a level term life insurance policy with £100,000 of cover over a 20-year term:

AgePremium price per month for a smokerPremium price per month for a non-smoker
20£4.08£3.55
25£5.30£4.31
30£6.31£4.34
35£9.92£5.77
40£15.74£7.97
45£25.69£11.43
50£44.02£16.89


Quitting smoking can help you to secure a more favourable premium, but you’ll need to have been free of nicotine for a certain period of time before insurers will offer you non-smoker rates (this is usually 12 months but can vary between providers).

Did you know? Insurers classify you as a smoker if you have used any nicotine or nicotine replacement products, including gum, patches and e-cigarettes.


4) Medical history

The presence of certain medical conditions, such as type 1 diabetes or MS, can significantly increase the cost of your premiums.

The increased risk of having a serious health condition poses a greater risk to the insurer as a claim can be more likely to occur.

How much your premiums are affected by a pre-existing medical condition will vary depending on the type of illness you have as well as the severity and frequency of your symptoms.

Equally, if you have previously had cancer, your monthly premiums will be increased.

It's also worth noting that the majority of insurers will not cover you unless you have been in remission for at least 5 years.


5) Mental health and suicide

As well as physical health, your mental wellbeing is also taken into account when applying for life insurance.

As with your physical health, the impact your mental health has on your day-to-day life, and the treatment you receive, could influence the cost of premiums.

Rest assured, declaring that you experience mental health problems won’t prevent you from securing cover.

Previous suicide attempts and self-harm may not prevent you from securing life insurance, but your application will be required to go through manual underwriting (this is where your policy is written by an underwriter, rather than going through an automated process).

However, some providers may decline your application.

In this process, certain aspects such as the length of time since the occurrence and the treatment received will be taken into account.

It's also likely information will be collected from your GP (however, this can’t happen without your consent).


6) Family medical history

The presence of certain hereditary illnesses, such as heart disease or certain cancers, is taken into account due to the increased risk of you contracting this condition.

As a result, your monthly life insurance premium is likely to be increased.

It's typically accepted that the medical history of your family only needs to be taken into consideration until they reach a certain age, usually 60 years.

This is due to the common understanding that certain diseases are statistically more common after this threshold.

In some instances, the hereditary disease is written into the policy as an exclusion.

This means that if you die from one of the diseases previously experienced by a family member, your policy won’t pay out.


7) Substance use

Alcohol consumption and the use of recreational drugs both bring with them significant health risks which can shorten your life expectancy.

Therefore, regular overconsumption of alcohol (over 14 units per week) can lead to increased life insurance premiums.

If you’re actively taking recreational drugs, it’s likely that you’ll be declined cover due to the increased risk you pose.


8) Occupation

Having an occupation that is considered by insurers to be high-risk can lead to your premiums being increased.

High-risk occupations include (but aren’t limited to):


9) Hobbies

As with occupations, certain hobbies also have a higher level of risk attached to them. Therefore if you regularly take part in what is deemed to be a high-risk activity, you'll be charged a higher premium.

These activities include (but aren’t limited to):

  • Shooting
  • Deepsea fishing
  • Horse riding

If you’ve done any of these activities as a one-off, fear not, this won’t affect your premiums. You’re only likely to experience loaded premiums if you frequently take part in these hobbies.


10) Travel

Frequent travel to certain countries associated with high levels of disease and/or increased levels of violence can bring with it inflated premiums.

Whether for work or pleasure, frequently travelling to countries such as Libya, Syria, Iraq or Somalia can bring with it a higher life insurance premium.

Visit the UK Governments foreign travel website for information on over 200 countries.


11) Gender (not anymore)

In the past women were often quoted lower life insurance premiums due to statistically living longer than men.

However, on 21st December 2012, The European Court of Justice Gender Directive was introduced and it became illegal to take into account gender when calculating premiums.

Policy factors that affect your premiums

1) Level of cover

The level of cover (or sum assured) refers to the amount that you’d like paid out to your loved ones in the event of your passing.

The greater your level of cover, the more you’ll pay for your premiums.

The pay out sum you require will be determined by what you’d like to cover. Commonly this includes key expenses, such as:

  • Mortgage or rent payments
  • Outstanding debts
  • Daily family living costs
  • Additional childcare costs
  • Funeral costs
  • An inheritance

You can also add additional levels of cover, including terminal illness cover and critical illness cover.

The table below shows how your premium can increase based on your level of cover. Quotes are based on a 30-year old non-smoker, who is in good health, over a 20-year term:

Sum assuredLevel term
life insurance
Decreasing term
life insurance
£50,000£4.30£3.50
£100,000£4.34£3.83
£200,000£6.79£5.29
£500,000£13.66£9.32

Life Insurance Calculator

Calculate how much life insurance you may need by filling in the costs you’d like your policy to cover.

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£137,934 is the estimated mortgage debt per household in the UK.

The purchase of a home is likely to be the largest financial commitment any of us will make in our lifetime. Your life insurance should cover your remaining mortgage balance to allow your loved ones to stay in the family home should anything happen to you.

Source: Moneynerd.co.uk

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The average monthly household budget in the UK is £2,548 (that’s £30,576 per year), which is spent on transport, food & drink, utilities (gas, electricity, water etc), clothing, council tax and leisure activities.

With energy prices hitting a record high and the cost of living rising sharply in the UK, you may wish to factor in utility bills and family living expenses into your cover.

Source: Nimblefins.co.uk

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The average personal debt of UK adults has risen to £34,566 (not including mortgage debt), with credit cards, personal loans and overdrafts being the most common forms of debt.

Factoring in any debts into your life insurance cover means that, if they need to be paid back from your estate after your passing, your loved ones won’t miss out financially.

Source: Money.co.uk

£
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According to SunLife, the average cost of a funeral in the UK is £3,953 (with the overall cost of dying at £9,200).

Funeral costs have increased by 116% since 2004 and are a significant cost which should be factored into the amount of life insurance you secure.

Source: SunLife.co.uk

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When factoring in cover for your children, you may wish to calculate the amount based on how long it is until they reach financial independence.

This could include childcare (£7,000 per year for part-time care), school expenses (£1,519 per school year for uniforms, lunches, stationary etc), as well as an additional sum for further education (this could be a contribution of up to £5,000 per year).

Sources: Daynurseries.co.uk, Primarytimes.co.uk & Savethestudent.org

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2 in 5 adults say they are relying on an inheritance to fund their retirement.

Factoring in an inheritance to your sum assured could allow loved ones to live a more financially comfortable life. Alternatively, you could leave a cash gift to a charity of your choosing.

Source: Moneyage.co.uk

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If you’re lucky enough to have your own savings or are part of the 30% of UK residents who already have a life insurance policy in place, this can provide financial protection for loved ones.

By entering your current cover, savings or death in service amount you can reduce the sum assured you require.

Source: Scottishbusinessnews.net

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Your total cover estimate

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Let us find you our best quote.


2) Type of cover

There are a range of life insurance policies available, each carrying a different price tag and offering different levels of protection. These include:

Level term life insurance premiums
  • Provides cover for a specified period of time (often up to 40 years)
  • Will pay out if you pass away during the policy term
  • Pay out sum remains the same throughout the policy term
  • Cover amount can be up to £1,000,000
  • You’ll need to disclose medical information during the application process in order for insurers to calculate your premiums
  • Ideal for helping to cover large expenses such as an interest-only mortgage or family living costs
  • Premiums start from 20p-a-day through Reassured
Decreasing term life insurance premiums
  • Provides cover for a specified period of time (often up to 40 years)
  • Will pay out if you pass away during the policy term
  • Sum assured reduces throughout the policy term
  • Cover amount can be up to £1,000,000
  • You’ll need to disclose medical information during the application process in order for insurers to calculate your premiums
  • Ideal for helping to protect a repayment mortgage as your sum assured can reduce in line with your remaining mortgage balance
  • Premiums start from 20p-a-day through Reassured ¥
Whole of life insurance premiums
  • Provides lifelong cover
  • Guarantees to pay out after your passing
  • Sum assured remains fixed throughout the policy lifetime
  • Cover amount can be up to £1,000,000
  • You’ll need to disclose medical information during the application process in order for insurers to calculate your premiums
  • Ideal for guaranteeing an inheritance
  • Premiums from 27p-a-day through Reassured ±
Over 50s life insurance premiums
  • Cover will remain in place for the remainder of your life
  • Guarantees to pay out after your passing
  • Sum assured remains fixed throughout the policy lifetime
  • Cover amount can be up to £20,000 (depending on personal circumstances and budget)
  • No medical information is required as acceptance is guaranteed to UK residents aged 50 - 85, instead premiums are calculated using your age, sum assured and (sometimes) smoking status
  • Ideal for helping to cover funeral costs
  • Premiums start from £5 a month through Reassured +

2) Length of cover

The longer the policy term, the more you’ll pay for your premium. This is because, the longer you’re covered for, the more likely it is for a pay out to be made.

This is why whole of life insurance premiums tend to be more expensive than term life insurance premiums, as cover lasts for life and a pay out is guaranteed

The table below demonstrates how your term length can influence the price you pay.

Quotes are based on a 30-year old non-smoker, who is in good health, for £100,000 of cover:

Term lengthLevel term life insuranceDecreasing term life insuranceWhole of life insurance
20-year term (level term)£4.34£3.83

--

40-year term (level term)£7.27£5.37--
Lifelong cover----£78.53

4) Premium type

There are two types of life insurance premium, guaranteed and reviewable;

  1. A guaranteed premium remains fixed throughout the policy lifetime
  2. A reviewable premium is reviewed at regular intervals and can increase overtime

Reviewable premiums often start cheaper but can increase in price over time at the discretion of the insurer.

With guaranteed premiums, you benefit from your premium remaining the same throughout the policy lifetime, meaning you won’t pay any more for your cover than originally agreed.

Reassured only provide life insurance policies with guaranteed premiums, meaning you’ll never pay more for your cover.

What are average term life insurance premiums (by age)?

Term life insurance premiums are calculated using key information, including:

  • Age
  • Smoking status
  • Occupation
  • Medical history
  • Hobbies
  • Lifestyle
  • Policy type
  • Level of cover
  • Length of cover

These factors help insurers to determine the level of risk involved with offering you cover, and your premium will be calculated accordingly.

The table below shows example quotes for both level and decreasing term life insurance.

Quotes are based on a non-smoker who is in good health for £100,000 of cover over a 20-year policy term:

AgeLevel term premium price per monthDecreasing term premium price per month
20£3.55£3.50
25£4.31£3.50
30£4.34£3.83
35£5.77£4.44
40£7.97£5.47
45£11.43£7.56
50£16.89£11.85


Decreasing term life insurance often has the cheapest premiums as your risk to the insurer decreases each year as your sum assured reduces.

Compare both level and decreasing term life insurance using the services of Reassured to find the right policy to meet your needs at the best available price.

For more information we have created this in-depth average cost of life insurance UK guide which draws on extensive internal research from 142,576 term policies sold.

How much are whole of life insurance premiums?

Again, whole of life insurance premiums are calculated using key criteria (outlined in this article).

Due to cover lasting for the remainder of your life and a pay out being guaranteed, premiums for whole of life insurance tend to be more expensive.

The table below shows example quotes for a whole of life insurance policy.

Quotes are based on a non-smoker, who is in good health for £50,000 of cover:

AgePremium price per month
20£34.16
25£38.34
30£43.77
35£51.17
40£60.84
45£67.62
50£74.56


While premiums tend to be cheaper at a younger age, if paying this price for the rest of your life, it could become very costly.

For this reason, whole of life insurance can be better suited to those later on in life who want to guarantee an inheritance for their loved ones.

Why not let Reassured help you to compare multiple whole of life insurance quotes to find our most affordable premium price?

Why you shouldn’t lie for lower premiums

With so many factors to disclose during the application process, it could be tempting to falsify or withhold information in the hope of securing a more favourable premium.

However, this can prevent a pay out being made to your loved ones when the time comes. Meaning your selfless investment would be wasted.

Failing to provide the truth on your life insurance application is known as non-disclosure. Not only can non-disclosure invalidate your policy but it’s also a form of insurance fraud.

Insurers are used to applicants from all walks of life, so don’t feel ashamed to provide certain details. Honesty is always the best policy.

Are life insurance premiums refundable?

If you cancel your life insurance policy within 30 days, most providers will offer a full refund of any premiums paid into the policy.

This is known as a ‘cooling off period’.

Cancelling a policy at any point after the initial cooling off period won’t result in a refund of any kind.

Please note: cancellation policies will vary between providers so, when taking out a policy, it’s important to familiarise yourself with the full terms and conditions.

Are life insurance premiums tax deductible?

Unfortunately, no. The premiums paid for a personal life insurance plan won’t be tax deductible.

However, if you own a business, you may be eligible to take out business life insurance policies such as keyman insurance and relevant life insurance.

These are policies that benefit the business and, therefore, the premiums paid can be classed as a business expense making them tax deductible.

If you’re a business owner, you can check out our complete is life insurance an allowable business expense? guide to find out more.

Find your cheapest life insurance premium by comparing quotes

Comparing quotes is essential in finding the most affordable life insurance premium.

Using the award-winning services of Reassured will allow you to compare quotes from multiple providers as well as compare multiple policy types.

We’ll do our best to help you find the right price for the policy of your choice.

A friendly member of the team can also help you through the entire application process and answer any questions you may have.

Why not seize the day and save time and money by comparing quotes through Reassured? Premiums start from just 20p-a-day.

Life insurance premiums FAQs

Are life insurance premiums paid monthly?

Yes, you’ll pay your life insurance premium on a monthly basis.

It can sometimes be possible to pay your premiums on a yearly or quarterly basis but not all providers will offer this option.


What happens if you don’t pay life insurance premiums?

If you fail to keep up with your monthly life insurance payments, then your cover will become invalid. This means that when you pass away, a pay out won’t be made to your loved ones.

If you fall on hard times and find yourself struggling with your monthly payments, there are some alternatives to cancelling your policy.


How long do you pay premiums for whole of life insurance?

As cover lasts for life with a whole of life insurance policy, you’ll need to pay premiums for the remainder of your life.

However, there is usually an upper age limit written into the terms and conditions of a whole of life insurance policy.

This means, at the specified age, you’ll no longer be required to pay premiums but your cover will remain in place.

This is most commonly around 80 years old but this age can vary between providers.


Do I get money back if I cancel my life insurance?

You typically won’t receive any money back if you cancel your life insurance policy unless your provider offers a 30-day cooling off period.

This means if you cancel within 30 days of the start date of your policy, you’ll be refunded any premiums you’ve paid.


Do life insurance premiums increase with age?

Yes, the price you pay for life insurance will increase as you get older.

The longer you put off taking out cover, the more you’re likely to pay for your premiums.

Taking out life insurance as a young adult (and while you’re in good health) can help you to lock in the cheapest premium possible throughout the lifetime of your policy.

Why not seize the day and compare quotes through Reassured?


Can someone else pay my life insurance premiums?

It’s possible for a life insurance policy to be bought for another person if insurable interest (the policyholder’s passing would result in some sort of financial loss) can be proved.


Can you pay life insurance premiums in advance?

Advance premiums or pre-paid premiums do exist, however, these are more common with other insurance products and it’s unlikely to find these premium types offered with a life insurance policy.

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