Life insurance premiums are not arbitrary numbers; they’re calculated based on several key factors. Your age, health, lifestyle choices, and the type of policy all play a role in determining your premiums.

By having a clear understanding of these factors, you can make smart choices that align with your budget and cover needs. We’ll delve into the details of life insurance premiums, providing you with the knowledge you need to get suitable life cover.

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What is a life insurance premium?

A premium is the amount of money you pay to keep your policy active. It’s typically paid every month and is determined by the policy chosen. The cost of these premiums is typically based on factors such as age, health and lifestyle.

Insurers also consider aspects such as the policy term and the amount of cover you want your family to receive after your death.

When applying, be honest about the information you give. Lying about your health or other personal details can lead to an incorrect premium being calculated. This, in return, could result in the policy being cancelled or a payout being denied.

Once everything is agreed, you’ll pay via direct debit or a payment plan each month to keep the policy running.

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 maintain cover.

If you are facing financial difficulty, please contact your insurer before cancelling your policy or letting it lapse. They may have options available to help you remain covered.​

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What factors affect life insurance premiums?

As already mentioned, there are several factors that affect the cost of life insurance premiums, including:

Age

As you get older, the cost of your premiums will most likely increase. People who are younger are typically considered being at lower risk of death, making them cheaper to insure. This is because they’re deemed less of a risk to insure, and unlikely to develop health issues until later in life.

With this in mind, it's worth buying cover early so as not to miss out on cheaper premiums.

Health

Your insurer will assess aspects such as your current health, medical history, and any family history of certain illnesses. This could be through a health exam or questionnaire. If you have any pre-existing conditions, you could expect to pay more for your policy as they may consider you a higher risk.

Most times, people who are healthier and live a healthier lifestyle will have lower premiums than those who are less healthy.

Even if you have health conditions, you may still be eligible for cover. However, it's important to answer questions accurately and honestly so that the right premium is calculated.

One option to consider is guaranteed life insurance - this policy covers you regardless of health. However, premiums can be more expensive than for a standard policy.

Type of policy

There are two main types of life insurance policies: term life and whole life. The size of your premium will depend on the type of cover you choose and the length of your policy. So, understanding how each policy works is essential.

Term life policies cover you for a set period, usually 5-50 years. The policy will pay if you die within the policy term. If you survive, the policy expires. Generally, term life policies have lower premiums than whole life policies, as they do not guarantee a payout.

Whole life policies provide cover for your entire lifetime and offer a range of additional benefits. They offer a guarantee that your family/loved ones will receive a payout. However, they tend to be much more expensive than term life policies.

Both types of cover premiums are fixed, unless you opt for an increasing policy. In this case, your premiums and the sum assured will rise over time.

For more information please see: How to choose the right life insurance plan

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.

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Lifestyle

Your insurer will assess your lifestyle choices, such as whether you smoke, vape or take part in risky activities. If so, it could lead to higher premiums. After all, smoking increases the risk of developing serious illnesses, which shortens your life expectancy.

You may be able to reduce your premiums later down the line if you have remained smoke/vape-free for at least 12 months - with some insurers, this does require a whole new application later on, so it may be worth obtaining a new quote before cancelling, just to be sure.

Insurers may also ask you about your alcohol consumption. If you drink more than the recommended levels, then this could impact your premiums.

Amount of cover

How much cover you need will ultimately affect the cost of your premiums. For example, if you only need a small amount of cover, you can expect to pay a low premium. Whereas, if your family/loved ones need a large amount of cover, you'll pay more for premiums as a result.

This is where calculating the right amount of cover goes a long way. Think about your current financial situation, including debts and any assets you have, so you get the right amount of cover for your needs. Also consider any death-related expenses you'd like to help your family with, such as funeral costs.

For more information, please see: How Much Life Insurance Do I Need?

Occupation

Generally, those in higher-risk occupations like construction or working with hazardous materials will pay a higher premium. This is because they're seen to be at greater risk of death or injury. Whereas, those in lower-risk occupations will be unaffected.

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Tips to reduce your premiums

There are a number of ways to lower the cost of life insurance, such as:

  • Shop around: Compare different policies from insurers so you can find the best one for your budget.
     

  • Take out cover early: The younger you are when taking out life insurance, the less expensive it will be.
     

  • Quit smoking: If you quit smoking and/or vaping for at least 12 months before applying for cover,, you may be eligible for a lower premium.
     

  • Consider your needs: Weigh up how much cover your family/loved ones will need, and for how long. You should also think about who will be covered under the policy and what additional benefits you might need.
     

Look into joint life insurance: Consider taking out a joint policy with your partner or spouse. This could be cheaper than taking out separate policies.

How can I get a life insurance quote?

With Cavendish Online, getting a quote couldn't be easier. We offer 3 routes to apply for life insurance:

Route 1: If you know exactly what you need, are generally in good health, and are confident in writing your policy in trust, you can get a low-cost online quote and apply for life insurance within 30 minutes.

Route 2: If you need help to select the best policy and are generally in good health or have minor health issues, our advisers can guide you through your quote. With their guidance, you could be covered within 30 minutes.

Route 3: If you have medical disclosures or hazardous occupations, you can request a callback for advice. Our advisers can then help you find the most suitable and affordable policy that best suits your needs.

Recommended for those who would like an adviser to recommend the right life insurance policy for them and have or previously had a medical condition, whether well managed or not.

Speak to an adviser today to get the financial protection your family and/or loved ones deserve.

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Give our advisers a call today.

Our team of friendly and professional advisers are on hand to help with any questions you may have regarding Life Insurance.

The advisers can also make recommendations tailored to your current situation and will research the market on your behalf, ensuring you secure the cover you need and supporting you every step of the way. 


01392 43 61 93(Monday to Friday, 9am - 5.30pm)

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