What is the average cost of life insurance in the UK?

Life insurance is not a legal requirement for those in the UK, however it does offer the financial security for your partner, children and loved ones if you pass away. But how much does life insurance set you back and what factors impact the cost?

Life insurance increases with Age

There are a variety of factors that have an impact on life insurance but one of the main considerations is age. Inevitable, life insurance tends to gradually increase by age with the average decreasing term life insurance policy to protect a 30-year term mortgage for 250,000 is £6.42 for someone aged 20, while this increases to £36.27 when you reach age 50.

The cost rising with age shouldn’t deter those growing older, as there are specialist policies that are available for over 60s who are looking for life insurance options. There are multiple policies for over 60s life insurance from level term, decreasing term, whole life and over 50s plans. This can vary the price with a level term plan of £100,000 will cost a 65-year-old £70.56 a month on average but a whole life of £100,000 costing £262.70 on average per month.

Research from Reassured revealed that the average monthly premium for life insurance could vary from £15.85 to £30.40 depending on a variety of individual circumstances such as smokers and non-smokers, different ages, and different levels of cover.

Smokers will pay a third more than non-smokers

The research from Reassured further stated that smokers pay an average of 34% more compared to non-smokers as they are more likely to suffer an early death, or a critical illness. For example, a non-smoking 35-year-old will on average pay £7.92 per month for life insurance, while a smoking 35-year-old pays £14.60, nearly double a non-smoker.

The insurers use a model that if you have used tobacco in the last 12 months you are deemed as a smoker, whether you have 20-a-day or the odd social smoke. The cost difference can lead to people lying about their smoking status, but this can be found out through medical record checks.

Which is cheaper level term or decreasing term life insurance

There are two main types of life insurance, one is level term life insurance which is a fixed sum of money throughout the term, whereas decreasing term life insurance reduces each year you have the policy usually in line with a repayment mortgage.

How do they differ in price? Decreasing term life insurance is the cheapest form of life insurance as the pay-out received reduces throughout the policy. Reassured research showed that for a non-smoker for £100,000 of cover over a 30-year term, a 45-year-old would be paying £17.37 on average with a level term policy but only £10.89 on a decreasing term policy. The savings increase on a decreasing term policy with age, as a 30-year-old saves an average of 11.3% but for a 50-year-old that rises to 40.6%.

Life insurance has a variety of factors, so will always differ per person with everyone having different circumstances. It will always increase with age but there are policies out there for everyone to ensure they have the comfort of protecting their loved ones.

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