How much does life insurance cost?

7 minutes

When a big life change happens, like buying a house, having children, moving away from family and friends or getting married, many consider taking out a life insurance policy for additional peace of mind

Some just choose life insurance for extra security, even without major life changes happening. Whatever your reasons, knowing how much you might need to set aside monthly before you take out your policy can help you budget accordingly, especially if your living costs are about to increase.

Numerous factors affect how much a life insurance policy costs and the premiums you’ll pay, including your age, the amount of cover you need and the type of policy you choose. 

The information on this page should not be considered as financial advice. If you are unsure what’s right for you, please make sure you speak to a financial adviser.

How much is life insurance?

Life insurance policies can start from as little as £5 a month, depending on the type of cover, how much you want to be covered for, how long you need the cover for and the type of policy you choose. You may also be impacted by certain lifestyle choices, where you live and your overall health.

What affects the cost of life insurance?

Many things can affect the cost of life insurance. However, the main factors are:

  • Your age. The older you are, the more your monthly life insurance may cost as age comes with a greater risk of medical problems and illnesses. However, a life insurance policy will still offer you and your loved ones reassurance in case the worst happens.
  • Your health. If you have any pre-existing medical conditions, whether physical or mental, you’ll need to disclose these as it can affect how much you pay every month.
  • Your lifestyle choices, such as being a smoker or partaking in dangerous hobbies. Your monthly premiums will cost more if there is a greater risk of serious injury or illness.
  • Your medical history, and wider family medical history. If you’ve had illnesses in the past that could reoccur or a family history of certain medical issues, your premiums may increase. You may choose life insurance to help your family just in case you become sick.
  • Your weight. If you are obese or severely overweight, your premiums may cost more as there is a greater chance of severe health complications.
  • What job you have. While some jobs are relatively low risk, some jobs such as forestry, certain construction roles and those who work in high-risk industries may see a higher monthly cost as injury is far more likely.
  • The type of cover you choose. The most common types available are level, and decreasing cover, with some providers offering whole of life and policies aged for those 50 or older. Fixed-term life insurance tends to be the most cost-effective but isn’t right for everyone.
  • How long the policy is taken out for. A longer life insurance policy can result in a higher monthly cost, as the risk of you needing to claim does increase. This is why whole of life is often the most expensive choice
  • The total amount of cover you choose. The more you choose for your death benefit, the greater monthly cost to you.

While these are general factors, each life insurance policy taken out is looked at individually to assess the risks.

What other factors should you consider when choosing your life insurance?

Your life insurance costs will depend on the amount you want to cover and the purpose of your death benefit. After all, the factors that affect how much your life insurance costs aren’t only influenced by medical reasons. You may want to use your life insurance to protect future children, to cover an existing mortgage or debt or to support your spouse if you were to pass away.

Some add-ons can impact your life insurance policy, such as critical illness cover for you and your children. You will want to consider how much your family would need to live on if you were diagnosed with a critical illness and if your life expectancy was lowered. It can be a morbid thought, but it’s a conversation worth having to help you prepare for whatever the future holds. After all, it can never hurt to be overprepared.

  • Mortgage debt. At the point of taking out your life insurance policy, find out how much you have to pay, assuming the same rate of interest. This total sum should form part of the amount of cover you choose so you or your family can pay your mortgage off in the case of claiming on your life insurance. Alternatively, you may be advised to take out a life insurance policy when purchasing your first home as it reassures lenders that your mortgage will be paid in full if you pass away.
  • Rent. If you don’t have a mortgage, look at your monthly rent bills as well as any planned increases, and think about how much you would need to support monthly rental payments if you live with someone else.
  • Bills. Like with rental payments, bills are a part of life, but it’s worth knowing what one to two years’ worth of bill paying might look like. Think about all your bills and any increases you may be expecting such as a shared electricity bill or other household expenses, which often change regularly.
  • Childcare. The average annual cost of full-time childcare for any age is £14,030 in 2023. If you’ve got young children who may need childcare as they grow up, consider how much this would cost any dependents, assuming there may only be one caregiver.
  • Living costs. Economic crises occur regularly, and as such, creating a budget that allows you to live without the worry of borrowing is essential. Whether this is increasing inflation, or geopolitical issues driving up prices, it’s good to be realistic with your budgets.
  • Debt. If you have any debts, aside from your mortgage, factor this in. You can use your life insurance to help pay off outstanding debts, ensuring your beneficiaries won’t have to pay for it out of their pocket. Include the total amount plus any interest costs that could add up. Also, consider any debt fees and additional charges that may be incurred as well.
  • Education costs. Whether your children are privately educated or in a state school, education does have a cost associated with it. From having computers at home to paying for school trips and lunches, there’s always something going on. It’s estimated that over a child’s life, it costs parents approximately £18,000 to send their children to state schools. So, if you’ve got young children, this extra consideration could help them out in the future. 
  • Funeral costs. The average cost of a funeral is around £4,500 if you use a funeral director. This doesn’t include a wake or anything more than a basic coffin. If you want a burial with a headstone, this also costs more, as does a specialised service and memorial. It’s worth considering what you want your funeral to look like and any wishes you have, and adding these to costs.

How different types of life insurance affect cost

From fixed-term to single or joint policies, you can customise your life insurance to meet your needs. There are a variety of different types of life insurance on offer from LV= and other providers. Depending on which type you choose can affect how much it will cost you every month.

1. The cost of decreasing term cover

Decreasing cover often ends up costing less over time, as the amount of cover you have decreases over time. Although the amount you pay each month doesn’t change, this type of cover tends to be cheaper because the amount of cover reduces. Decreasing cover is most commonly taken out by people with a capital and interest repayment mortgage.  Using decreasing cover alongside a repayment mortgage means your total cover amount lowers in a similar way to the amount you owe on your mortgage reduces as you regularly pay it off each month.

2. The cost of level term cover

Level term cover stays fixed over the specified term you choose, which can work out more expensive when compared to decreasing term cover for example. Like decreasing term cover, the amount you pay for your life insurance each month also remains fixed.  This can be good if you have an interest only mortgage, want to have life insurance that would cover your living costs, or offer a gift to your loved ones if you pass away. However because the amount of cover stays fixed, it means it won’t keep up with rising costs, and so it’s real purchasing power reduces over time. 

3. The cost of increasing term cover

Increasing term cover costs more as the amount you pay and the cover you get both increase as the years pass. This can be used to help mitigate the effect of inflation. Essentially, if you pass away before your policy expires, your loved ones could receive a death benefit that has largely kept up with current living costs, even if it is 49 years old.

4. The cost of whole of life cover

Whole of life cover is the most expensive type of life insurance as it guarantees a payout, no matter the age of your passing. As it covers your entire life, it can be worthwhile for your loved ones, as they will get a payout regardless. For some, another form of life insurance may work better for them.

How to improve your life insurance estimate

While there are some factors completely out of your control, there are some smaller things you can do to help reduce the cost of your life insurance.

  • Be honest. By truthfully declaring every medical condition or lifestyle choice, you will get the best price, and also be sure that your insurer provides you with the right cover amount. If you’re not truthful, and the insurer finds this out when a claim is made, they may decline to pay the claim, leaving your loved ones without that valuable lump sum at the time they need it the most.
  • Stop smoking. Smokers often see a greater cost as the risk of serious illness increases with continued smoking. To see the effects of non-smoking on your life insurance, most insurers will need you to have quit for at least a year (12 months). If you quit midway through a policy, it’s best to contact your insurer to see if they can either update your policy or provide you with a new one.
  • Reduce alcohol intake. If you drink a high number of units of alcohol a week, your life insurance could cost more as you are at risk of serious illness with an increased alcohol intake. By cutting down the amount you drink you could see a reduction in the cost of your life insurance.
  • Lose weight. For those who are considered clinically obese, losing weight can reduce your life insurance cost. Some insurance providers may want your BMI, but as BMI doesn’t consider muscle a high BMI isn’t always an indication of being clinically obese. Many rugby players and weightlifters have a high BMI, although they are some of the most in-shape people out of everyone. A waist-to-height ratio calculation can also help you to understand whether you may be considered obese.

Now it’s time to get a life insurance quote

LV= offers award-winning life insurance policies with a variety of types of cover and factors. Get a quote with us today in less than 60 seconds.