What is the average cost of life insurance?

Have you ever wondered how much life insurance actually costs? Many people overlook the value of having cover, assuming it is too expensive to afford. However, the cost of life insurance can be cheaper than you think.

We'll look at the average cost of life cover, as well as the factors that can affect the price.

How much can I expect to pay for life insurance?

According to Insurance Hero, the average cost of life insurance in the UK is around £8 per month for every £100,000 worth of cover. Experts may claim that the amount of cover you need should be around ten times your annual salary.

The Office of National Statistics states the average UK salary in 2023 was £34,963 per year. So, with that in mind, if you earned £34,000 a year, you should be looking at around £300,000-350,000 in cover. This is without taking into account additional factors that may require more cover, such as debts, mortgages, or dependents.

What affects the cost of life insurance?

Insurers take several factors into consideration when calculating your monthly premium. These factors can include your age, health status, lifestyle choices, and whether you smoke or not.

f you're unsure which type of cover you need check out: Whole and term life insurance: Which is better?

Not everyone knows this, but you can actually get life insurance cover for more than one person. This is known as joint life insurance. Unlike a standard policy, it protects two people, paying out either after the first death in the couple or after both.

Age

Your age is one of the major factors insurers look at. Generally, the younger you are when you take out a policy, the cheaper it will be. Younger people are generally considered low risk by insurers as they are less likely to have health issues or pass away prematurely.

If you’re 25 years old, a non smoker with no health problems, you can expect to pay less per month for a standard term policy than someone who is 45 years old and also a non-smoker in good health. Those over 50 have the option of purchasing over 50's life insurance. At this age, you may have problems finding traditional life insurance due to health issues or age, so it can be a good alternative. However, this type of policy tends to have higher premiums as the insurer takes on more risk.

Lifestyle choices

Your lifestyle can also impact the cost of your premiums. For example, if you engage in high-risk activities such as skydiving or rock climbing, you may be charged higher premiums. Similarly, if you have a dangerous job or travel frequently to high-risk countries, this could also affect the cost of your cover.

Smoking is another factor that can significantly increase the cost of your life insurance. Smokers are considered a higher risk by insurers due to the increased likelihood of health issues and premature death associated with smoking. If you quit smoking, you may be able to reduce your monthly premiums after a certain period of time.

Learn more about life insurance for smokers

To work out the right amount, consider factors such as your current obligations, future financial goals, and the number of dependents you have. It's crucial to strike a balance between providing enough support for your loved ones without overestimating the amount, which could lead to high premiums.

See how much life insurance cover do I need? for more information.

What is the average payout for life insurance?

In a study carried out by the Association of British Insurers (ABI), the average UK life insurance payout in 2022 was £73,578. This will also depend on the specific policy and cover amount, but it gives you an idea of a typical payout.

How can I lower my life insurance premiums?

There are a few ways you can potentially lower your life insurance premiums:

• Improve your health: If you have any existing health conditions, work on improving them before applying for a quote. Just going to the gym once a week or making healthier food choices can have a positive impact on your overall health.
   
• Quit smoking: If you're a smoker, quitting can significantly reduce your life insurance premiums. Insurers typically consider you a higher risk if you smoke, so kicking the habit could lead to lower payments.
   
• Shop around: Don't settle for the first life insurance policy you come across. Compare quotes from different insurers to find the best deal for your needs. Different insurers offer different rates based on their underwriting criteria. With Cavendish Online, you can compare quotes from leading insurers and could be covered within 30 minutes.
   
• Choose the right amount of cover: Don't buy more cover than needed, as this can lead to higher premiums. Consider your financial obligations and future goals to determine the suitable amount of cover for your loved ones.
   
• Consider term life insurance: Term cover is typically more affordable than permanent because it only covers you for a specific time. If you only need cover for a limited time, it may be the more cost-effective option.