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Life insurance. Policy and figures of family.

What impacts the cost of your life insurance premiums?

Reassured, the UK’s largest life insurance broker, recently concluded that the average cost of life insurance in the UK is £38.15 per month.

Their internal findings were based on 142,756 term policies sold between 08/09/21 and 08/09/22, with an average cover amount of £151,972.

However, in reality, many policyholders will pay significantly more or less than this each month.

So, what are the main factors considered by insurers when calculating the cost of your premium, and more importantly how could you save money during the current cost of living crisis?


Your age at the point of application is one of the most influential factors when determining the cost of premiums.

Life insurance providers will calculate the cost of your monthly premium based on the level of risk you pose or put another way the likelihood of a future claim.

Unfortunately, as we age, the chance of experiencing a medical condition statistically increases and insurers will raise the cost of premiums to mitigate this heightened risk.

For example, whilst a 25-year-old non-smoker in good health could secure £200,000 of cover from approximately 20p-a-day; a 45-year-old, overweight, smoker with pre-existing medical conditions will likely pay two or three times more.

You can secure term-based life cover between the ages of 18 – 70; whilst the age bracket to take out an over 50s plan is between 50 – 80 years.

In order to lock in the lowest premium rate for an extended period of time it is usually a good idea to take our life insurance whilst still young and healthy.

Health and wellbeing

During the application process the insurer will ask a serious of questions regarding your current health, medical history, family medical history and smoking status. The answers to these questions will help the insurer calculate the premium cost.

Any pre-existing condition, historical condition, or hereditary condition within the family, will likely result in higher premiums, as the applicant imposes an increased risk on the insurer.

Those with less than favourable health may discover they either experience increased premiums, have their condition not included in their cover (an exclusion), or on rare occasions are declined life insurance cover altogether.

While many medical conditions cannot be controlled, other health and wellbeing factors can be. Those who smoke or use nicotine replacement products will find their premiums are noticeably higher and this trend accelerates as you age.

A high alcohol intake, the regular use of recreational drugs or undertaking dangerous/risky hobbies can also increase premiums. However, by making the right lifestyle changes you could lower your premiums.

Essentially, life insurance providers need to determine how likely a pay out will be. The greater the risk, the higher the premium.

Whilst it may be tempting to lie or withhold certain information during the application (known as non-disclosure) in order to secure a lower premium, this could jeopardise a future pay out and render your selfless investment a complete waste of time. This could leave your loved ones financially vulnerable at an already different time in their lives.


According to a recent NHS health survey, approximately two-thirds of the English population over 16 are considered overweight.

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While a little bit of extra weight may not impact life insurance premiums, those who are classified as obese or have a BMI above 30 will likely experience higher premiums.

Like smoking, being overweight is medically proven to increase the risk of numerous medical conditions. As such, insurers factor this into consideration when calculating an individual’s premiums.

Similarly, being chronically underweight or at a point where a person’s BMI is deemed medically unsafe will also increase premiums.

However, insurers will look at this on a case-by-case basis. For example, a bodybuilder, or someone with a naturally higher or lower BMI composition may experience no increase in premiums, and depending on other previously mentioned factors, may even experience similar or lower than average premiums.


The final significant personal factor considered is your occupation, and the risks associated undertaking that role.

Those who put their lives at increased risk each working day will experience additional loading on their premiums. Examples of high-risk jobs would include the military, emergency services, those who drive trucks, pilots, offshore workers, and those who operate heavy machinery.

Fortunately, many of these occupations often offer workplace benefits, such as death in service benefits, reducing the need for personal life insurance. However, the pay out sum from these policies is usually significantly lower than what can be attained with third party life insurance.

The length and level of cover

Life insurance cover comprises of two specific areas:

  1. The length of cover – This is how long life insurance covers an individual for, and is split between term-based life insurance and life assurance.Term-based life insurance is generally much cheaper, as it only covers you for a specified period of time (or term) determined on application. The policy term can range 2 – 40 years, with shorter periods having cheaper premiums (as a claim is less likely).

    Whilst life insurance pays out if you pass away during the policy term, life assurance pays out when you pass away. Therefore life assurance premiums are substantially higher, as the cover lasts until the policyholder passes away, guaranteeing (or assuring) a pay out. Over 50s life insurance is another form of life assurance, however the maximum pay out on these policies is £20,000. The proceeds are often used to cover funeral costs or leave an inheritance.

  2. The level of cover (or sum assured) – Depending on your personal circumstances and available budget, term based and whole of life insurance could provide up to £1 million cover. Logically, the greater the sum assured, the higher your premiums will be.

It is important to understand that the cost of your premiums will not change throughout the life of the policy, providing no amendments are made. The price is locked in until either the policy ends, the policy holder passes away or the policy is cancelled. Please note if you stop paying your premiums your cover will cease.

Compare life insurance quotes

Due to a competitive marketplace and the different underwriting processes employed, the price of premiums can vary significantly between insurers. For example, due to different thresholds one’s weight/BMI may be deemed high risk by one insurer, whilst another may offer standard terms.

Even a small saving on your premium each month, over a 25-to-30-year policy term, could add up to a significant sum. This cost saving is particularly poignant for many families at the time of writing this post with high inflation impacting disposable income.

Specialist insurers, such as The Exeter, also exist to provide cover for high-risk applicants, perhaps those with certain medical conditions or dangerous occupations – potentially offering cheaper premiums than mainstream insurers.

As a result of all the information above, it is imperative that you compare multiple quotes to ensure you obtain the right policy at the best available price.

A great way of comparing the life insurance market is by using an FCA regulated broker (often free of charge) or a reputable comparison website.

The past 3 years of the COVID-19 pandemic have taught us just how fragile life can be. Life insurance is a financial safety net for a worst-case scenario, securing the family home and future living costs if you are no longer around provide. If you have a family who rely on your income and do not have cover, why not seize the day in 2023?


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