Can my life insurance premiums increase?

If you're looking to buy life insurance cover, you may be wondering if your premiums could change during the policy. As life insurance policies can differ, it could also affect how your premiums work. Though it's possible for premiums to change, it could depend on the policy type and other potential factors.

In this guide, we'll look at how premiums work and some of the reasons your rate could rise.

How do life insurance premiums work?

If you’re comparing life insurance quotes, you may have noticed that prices can differ between insurers.

The value of an insurance quote is usually defined as the premium. This is the amount of money you agree to pay your insurer for cover, either monthly, quarterly or annually.

You are required to pay the premium for as long as the policy lasts in order to remain covered. 

If you were to stop paying the premium for any reason, your policy could be cancelled. In this instance, your family and/or loved ones would be unable to make a claim on your policy if you died.

Another factor to consider is the amount of cover you want/need. Some people could need a large amount of cover to help towards significant expenses such as a mortgage. Others may wish to have a smaller amount of cover to support their family or to put towards a funeral.

The cost of the premiums could also depend on the type of life insurance you have. You could choose term life cover, which lasts for a set amount of years. Or whole life cover which lasts indefinitely so long as you continue to pay your premium. Whole life insurance is typically more expensive as it's more likely that a payout will be made.

If you are facing financial difficulties and can no longer afford your premiums, please contact your insurer as soon as possible to stop the plan from lapsing automatically. They may have a scheme that allows you to keep the cover.

How could my premiums be increased?

Policies like whole life insurance and level term life insurance have fixed premiums. As a result, the cost of your payments will stay the same as when the policy was agreed. For example, if you're paying £20 a month for a level-term policy, you'll pay the same amount until the policy ends.

One way your premiums can increase is if you have an increasing term life policy. The payout amount (or 'sum assured') can be raised overtime to match inflation. Therefore, your monthly premium may also increase to reflect any increase made to the payout value.

Make sure to check the terms and conditions of your policy agreement to understand how your premiums might be affected over time.

Please note: The insurance products offered by Cavendish Online have no cash-in value at any time. If you stop paying your premiums your cover will stop, your policy will end, and you will receive no benefit. If you have not claimed before the end of your chosen policy term, the policy will end, and no benefit will be paid.

Do premiums increase every year?

As mentioned above, premiums for policies like increasing term cover could rise if there are changes to the payout amount due to inflation. If inflation is accounted for, the premiums may rise accordingly.

Not all policies see a yearly increase. Policies such as whole life insurance and level-term life insurance, have fixed premiums that remain constant throughout the policy.

Do life insurance premiums increase with age?

Once you take out life insurance, your premiums won't increase as you age, but it can still impact costs.

For instance, you could decide to cancel the policy if you feel that it’s no longer required. If you were to change your mind and reapply for cover, your premium rate will likely be higher as you would have aged since you originally took out the policy.

Insurers often calculate premiums based on age, therefore, as you get older, the likelihood of making a claim increases. Your future premiums could also increase if you develop an illness or health condition between cancelling your cover.

How can I lower my premium cost?

If you're concerned about the cost of life insurance, there are some ways you could potentially reduce your premiums.

For starters, you could opt for a term life policy, which as mentioned is often cheaper than whole life insurance.

A joint life insurance policy may also be cheaper as it is shared between two people such as spouses. Each policy could benefit you in different ways so it's important to consider which could help you best.

You may also want to think about when to get life insurance as in most cases, the younger you are, the lower the premium. Buying a fixed policy early could result in lower premiums throughout the policy.

Smoking is another significant factor in life insurance. If you smoke regularly (including e-cigarettes), quitting could be the best way to reduce your premiums. You may also be able to lower your premiums during the policy, usually if you remain smoke-free for at least 12 months.

Learn more about how to get cheap life insurance