What is the Average Cost of Life Insurance?

man discussing life insurance policy on his mobile phone

Taking out life insurance cover is a very personal matter, and there are many misconceptions surrounding the cost of life insurance. Many people assume that it is expensive, but this can all depend on your individual circumstances. There are a number of factors that could affect the cost of your life insurance cover, and it is important to understand this before taking out a policy.

At Caspian Insurance we aim to help families get the right level of protection that is affordable to them. With that in mind, we are here to help you understand the cost of life insurance.

How much cover do you need?

There are a number of factors that will affect the cost of your life insurance cover, including the amount of cover you take out. The amount of cover and the type of policy you choose can have an impact on your monthly premiums, along with basic factors like your age, health and lifestyle choices.

Different types of insurance can also carry different costs. The two main types of life cover that you will come across are level term and decreasing term. The cost of level term life insurance does not change during the length of the policy; your monthly premiums are fixed and the pay-out will be the same whether you pass away at the start or the end of the policy.

Decreasing term life cover is designed to help pay off a mortgage and will decrease over time. This is because the amount of cover you need will reduce as you continue to pay off your repayment mortgage or other financial obligation.

Calculating your premiums

When it comes to taking out life insurance, you can either decide how much you can afford to pay each month and calculate how much cover that would provide; or you can decide on the pay-out amount which will then, in part, determine your premiums. Whichever way you take out life cover, it is important to assess your needs and circumstances.

Consider financial responsibilities such as your mortgage or other debt, your cost of living and if you have any dependents. This will all play a factor in how much life cover you should take out.

Your premiums may also be based on how much of a risk you are considered to be by your chosen insurance provider.

The average cost of life insurance

The truth is, there is no such thing as an average cost. Everyone has different needs and everyone’s circumstances can differ wildly. The price of your cover is usually based on personal information, including your age, weight, family medical history, lifestyle concerns and any known illnesses. Your profession may also play a role, as some jobs can place you more at risk than others.

Many providers will ask for similar information, although it can differ slightly. Your life insurance cover and premiums are based on this individual information, so it is important that you answer each question truthfully. Your policy may not pay out or pay out in full, if it turns out something in your application was inaccurate.

Due to this, your life insurance is tailored to you and your individual circumstances. So, if you have a friend who is paying much less on their premiums than you, this does not mean you have been given a bad deal. It simply means your situation is different and you may have different needs.

Improving the average price of life insurance

If you are hoping to keep your monthly premiums low, you should consider making some lifestyle changes. However, it is important that you do this before taking out a policy. For instance, you can try to maintain a healthy weight or quit smoking. In some cases, to be considered a non-smoker on a life insurance policy, you must not have smoked or used other nicotine replacement therapy for 12 months. Both of these factors may reduce the cost of your life insurance.

It could also be beneficial to take out life cover when you are younger. The older you are, the more expensive your premiums could be, as you may be seen as a higher risk by the Life Insurance providers.

If you are looking for the right life insurance at the right price, a life insurance broker such as ourselves can compare a range of the major providers for you. Our UK team are able to find tailored policies to suit your needs and budget, along with a free trust service to help you understand how the different policies work. Contact us today for more information.

Please note the above is not to be taken as financial advice. Protection policies have no cash in value and an application is subject to an insurers full underwriting process.