What’s the average life insurance cost in the UK?

Posted 16th July 2021 by Chris Reed

Last updated on February 7th, 2023 at 09:55 am

How much does life insurance cost?

The average cost of life insurance in 2021 is £31.77 according to data from Protect Line^[1]. While the lowest priced cover sold by many insurers is £5 per month, some individuals choose to pay £100’s toward their cover. 

If you’re fit, healthy and young, to some degree you can choose the cover amount that’s right for your needs. As life goes on, your choices can become limited and sometimes, it can become a question of “how much cover can I afford?” 

It’s also important to note that prices can vary greatly from one insurance company to another. Using a whole of market broker like Protect Line could save you thousands of pounds across the policy term.

Considering many life insurance adverts cite “Life insurance from £5 per month” we explore what affects the price of life cover and how much you may want or need.

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How much life insurance do you need?

How much cover you need is dependent on what is important to you. Life insurance cover is all about giving you peace of mind. At the end of the day, you will not be here to see how it’s spent, so it’s about how having the cover now (or not) makes you feel today.

Legally, you do not have to have any life insurance policies. Sometimes your mortgage company will require you to take it, however it does not have to be taken through your mortgage company or broker.

If you decide you would like some peace of mind, you then need to consider how much you want. There are many factors to consider while deciding how much life insurance you need. Here are just a few factors to consider:

Factors to consider

• Mortgage/Your Home
  • Where would you want your partner and kids (if you’re a parent by then) to live?
    • In the house you live in now?
  • If you rent, could they continue to pay the rent or would they need to move or get another job?
  • If you have a mortgage, how would they keep up the repayments?
    • Would you want them to move quickly to cheaper accommodation if something happened?
    • How quickly would they have to move?
• Your Partner’s Job
  • Could your partner pay all the bills alone?
  • Would they or could they increase their hours?
    • Would you want them to?
• Childcare Costs
  • How much do you pay out in childcare now?
    • Would this change if you couldn’t help out with looking after the kids?
  • Would your partner have to change their job or reduce their hours to look after the children more?
  • Consider if you’d be happy for your children to be in childcare more if you were not here to look after them.
  • How much money would your partner need to reduce their hours at work to look after the kids?
• Kids’ Future
  • Are you saving for your children’s education, first car or a house deposit?
    • Would you still like them to have that lump sum if something happened to you?
  • What clubs are your children part of and what do they cost?
  • Would you like your kids to go on future school trips?
  • Are they at a private school or would you like them to be?
• Funeral Costs
  • On average, the cost for a burial is £4,383, who would pay this if the worst were to happen?
  • Have you got any special requests for your funeral?
    • What would they cost?
• Debts – You may need to consider your finances
  • Some of your debts will be taken from your “estate”. So, while your family is unlikely to have to directly pay your debts, they may not get all of what you leave behind. Are you ok with this? 
  • Would you like your debts to be cleared to reduce the burden for your family?
    • How much is your outstanding debt?
• Inheritance Tax
  • In 2021 the standard Inheritance Tax rate is 40% on estates over £325,000. Tax is a complicated matter and you should seek independent advice on your own circumstances. Once you know what you may owe the HMRC, you may consider if you would like your beneficiaries to pay the tax. Life insurance may also be taxed in certain circumstances. Some people use whole of life insurance in a trust to help children to pay their inheritance tax bill.

And that’s just the start. Everyone’s financial circumstances and personal situation are different, which is why it can sometimes be easier to speak to someone impartial. Our life insurance experts are trained not to give you advice, but to help you decide what is right for you and your family. We’ll listen first and help second. No pushy sales tactics, no hard sell. We’re here to help you figure this out. We enjoy our jobs so we’ll attempt to make what can be a gloomy topic fun where we can.

Still unsure how much life insurance you need?

We designed our life insurance calculator to give you a head start on deciding how much cover you may need. Simply use the sliders and in a few simple steps you’ll be one step closer to making that decision.

What affects the cost of life insurance per month?

Your health, lifestyle and how much cover you want are the key factors in the cost of your life insurance quote. They base your premiums on the risk the insurer believes they have of paying out. As a rule of thumb, the higher the risk, the higher the price.

Some people get caught out because of picking an insurance provider that is less tolerant of their circumstances. It’s a good idea to write down any factors that may have an effect on your price before speaking to your whole of market broker.

Here are some questions to help you construct your list:

1. Have you ever needed an operation or spent a night in a hospital? If so, what was it for?
2. Do you take any medication currently or have you done so in the last 5 years? (Remember to write down the name and dosage of the medication).
3. Have you received treatment by any medical professional in the last 5 years? (Don’t forget chemists, chiropractors, physiotherapists, nurses etc).
4. What is your occupation? Does it involve any high-risk activities? (e.g. working at heights, in the armed forces, scuba diving, working with explosives, etc.).
5. What is your height, weight and waist size (or dress size)?
6. Do you have any high-risk hobbies (Including flying, diving, canyoning, bungee jumping, motorbike or car racing?
7. Have either of your parents, brothers or sisters suffered from any hereditary diseases? (Including diabetes, strokes, heart attacks, MS etc).
8. Are you currently awaiting to see a medical professional for anything? (Awaiting tests, results or awaiting an appointment?)
9. Are you suffering from any symptoms that have not yet been diagnosed? 

If you answered “yes” to any of the above, it does not necessarily mean your policy will increase in price or be declined. However, it’s important to ensure you accurately detail your individual circumstances to your broker. These are just some of the questions you may be asked. Our professionals will then be able to use their tools and experience to help you find the most competitive life insurance premium.

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Other factors that affect the cost of life insurance

The majority of life insurance policies in the UK are sold as “guaranteed premiums”. This means your insurer will not review or change your premium during the duration of the policy. As a result, the younger you are, the cheaper your premium.

So why doesn’t everyone take a huge policy when they’re 18? 

Because most of us had no idea what life insurance was when we were 18, right? Plus, when taking cover, you need to consider how long you need to be covered for. The obvious answer is “until I die” however, sadly it’s not that easy.

Here are 2 policy types explained;

1. Term Life Insurance – Cover lasts for a fixed period, e.g. 20 years. Once the term is complete, the cover is finished. Nothing is paid out. The shorter the term, the cheaper the cover.
2. Whole of Life insurance – You pay the premiums on this cover until the day you die. The cover will pay out (as long as you pay your premiums) no matter what age you get to.

The choice is easy, right? Whole of life? Everyone loves a guarantee. However, with life insurance, it comes at a cost. As an example, let’s look at the cost of £250,000 for a 33-year-old male:

_{*Quotes generated using Iress on 23/06/2021 for a male non-smoker who is 33 years old.}

As you can see, a term policy is significantly cheaper than a whole of life policy. The level term life insurance could provide your family with the security of £250,000 for a 25-year period £166.51 cheaper than the whole of life cover.

Decreasing cover (designed to decrease in line with a repayment mortgage) is cheaper again at just £7.26 per month.

However, consider this; if you were to live to the UK average age life expectancy of 81, which is the average UK life expectancy, that would mean you would pay into the whole of life policy for approximately 48 years (or 576 months). So 576 months times by £185.40 equals £106,790.40.

So you pay in £106k but your family get £250k!

Sounds too good to be true? Insurers can do this because they know most people will cancel their policy after 6 or 7 years. If you cancel your policy, the insurer profits from what you have paid in.

In reality, all of these policies cover different needs. The type of policy you take will usually depend on what you need it for. Here’s what people usually use these policies for:

Decreasing Term – Repayment Mortgage

Level or Increasing Term – Family cover or interest-only mortgage

Whole of life – Funeral expenses or inheritance tax planning

Of course, it’s completely up to you what type of life policy you choose. Why not compare your options? If you choose to use a fee-free whole of market broker, they can do all the legwork for you!

Get a free life insurance quote today

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Average life insurance cost for a mortgage UK

The average cost of mortgage life insurance in 2021 is £28.19 according to data from Protect Line^[1] . This is assuming that you want a decreasing policy that’s designed to decrease in line with a repayment mortgage.

Often choosing this form of life cover can ensure you get the cheapest life insurance to cover your mortgage. However, it’s worth understanding the differences between mortgage life insurance and a level term life policy. Your monthly premiums will remain the same on either policy, but the amount that your life insurance provider will payout will decrease if you choose a decreasing policy.

If you cannot afford to cover the total value of your mortgage, you could always consider a fixed and level amount that would help your family to remain in your home for a period of time. They could then use this lump sum to either pay the monthly mortgage amount or pay a lump sum off of the total outstanding amount.

Average life insurance cost – level term insurance vs decreasing term insurance

A level term policy is typically more expensive than a decreasing term policy. The illustration below shows that a 33-year-old person wanting £250,000 of cover over 25 years could save £3.36 a month or 21% if they were to choose a decreasing rather than a level policy.

_{*Quotes generated using Iress on 29/06/2021 for a male non-smoker who is 33 years old.}

If you’re unsure of what level of financial protection you should choose, it may pay to talk it through with a broker. They can provide you with a range of quotes that are bespoke to your age, smoking status and health conditions.

Get a free life insurance quote today

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Average cost of joint life insurance

Joint Life Insurance on average can be double the price of a single life insurance policy.

The majority of joint life insurance policies will only pay out once. However, the cost often is almost the same as 2 individual policies. Sometimes you can choose if the policy pays on the death of the first or second person, but this tends to only be relevant when discussing matters like inheritance tax planning.

Most people take a joint policy when they take out a joint mortgage. If this is what you’ve done, it could pay to check what two single policies would cost you, as two single policies would pay out on each death’. Sometimes you can double your cover level for £1 or £2 more per month compared to a joint policy that would only pay out once. If you have children, this could make a substantial difference to the total payout they receive should something happen to both yourself and your partner.

Average life insurance cost for a smoker

Smoking or vaping can significantly increase the cost of your life insurance. In fact, in our example, a smoker would pay 177% of the price of a non-smoker. That’s a whopping £2,541 extra over the policy term. To be classified as a non-smoker, you’ll need to be nicotine free for at least 12 months.

^{*Quotes generated using Iress on 29/06/2021 for a 33 year old male .}

Average life insurance cost for women

Protect Line report only minor differences between the average premiums paid by women and men.

As of 21st December 2012 the EU Court of Justice ruled that you cannot be charged more or less for your insurance because of your gender. Prior to this date, women paid slightly less for their policies than men. If therefore you are reviewing a policy that was taken before 2012 you may find costs for women have risen.

Average life insurance cost for men

Protect Line report only minor differences between the average premiums paid by men and women.

As of 21st December 2012, the EU Court of Justice ruled that you cannot be charged more or less for your insurance because of your gender. Prior to this date, men paid slightly more for their policies than women. If therefore you are reviewing a policy that was taken before 2012 you may find costs for men have slightly decreased, however your increasing age may have put the price back up.

Average cost of whole of life insurance

Whole life policies pay a death benefit whenever you die, even if you live to 100+! On the other hand, it’s likely to be the most expensive option of them all. In our example below, the whole of life quote is 1602.48% more than the 25-year term.

Amount	Term	Basis	Premium
£250,000	25 Years	Level	£10.89
£250,000	Whole Of Life	Level	£185.40

_{*Quotes generated using Iress on 30/06/2021 for a male non-smoker who is 33 years old.}

The reality is you’re very unlikely to be comparing these two options. It’s not really apples with apples. Yes, the whole of life looks expensive when you compare it with a term policy. Yet if you calculate what you’ll pay in versus what you get out, you may also be surprised.

E.g.

£250,000 payout divided by the premium of £185.40 = 1,348 months to pay in what you’ll get out. In other words, it would take you 112.3 years to pay in more than you’re going to get out. In this example, the 33-year-old chap would need to live beyond the ripe old age of 145 to be looking at a “bad deal”.

How can insurance companies do this? It sounds too good to be true. 

You’re right to be sceptical. Usually, when things sound too good to be true, they are. However, insurance companies can offer whole of life cover at these rates because they know most people will cancel them long before they would be eligible to claim.

Whole of life is designed so your family will get a payout as long as you keep up the monthly premiums. While that may sound very attractive, it’s still usually worth weighing it up against term policies. At a fraction of the price, it could make sense to have a term policy while you need a lot of cover (for things like mortgages and kids) and then maybe consider whole of life for smaller needs like funerals.

What’s the difference between whole of life and over 50s whole of life policies?

Over 50s policies (also known as guaranteed non-medical insurance) are whole of life policies. They pay a lump sum no matter what age you get to, just like a regular whole of life policy. In the main they differ in a few important ways:

1. No Medical Questionnaire – Over 50s policies are “guaranteed acceptance” meaning you can get cover no matter what medical conditions you have.
2. Waiting/Moratorium Period – With an over 50s policy, you’ll probably need to pay in for 1-2 years before you would be eligible to claim. This is the trade off of not being asked any medical or lifestyle questions. Some insurers offer “accidental death cover” during this waiting period, but it’s important to understand this will usually only pay out if you die for a non-medical related reason (e.g. you’re hit by a bus).
3. Payments Stop – Most traditional whole of life policies need to be paid forever (until you die). Whereas with Over 50s normally the payments stop at a certain age (often 90).
4. You May Get Back Less Than You Put In – Over 50s policies are open to anyone over the age of 50. As a result, you pay a much higher rate than a traditionally underwritten policy. If you are in good health, it may be worth comparing a standard policy.
5. You need to be 50 or older to qualify – Obvious, but you cannot get 50+ cover unless you’re over the age of 50.
6. The Payout Limits – Over 50s policies generally have a ceiling on how much you can insure yourself for. If you’re 50 now, it may be as high as £25k. Whereas if you’re getting closer to 80, you may find you can only secure £1k-2k.

As with all types of life cover, Over 50s insurance has a place. It may well work out as your cheapest option, especially if you’ve had a few medical problems or you’re currently receiving treatment. But, don’t be too hasty! Always find out what options you have to ensure you don’t end up paying too much for your protection. Contact a whole of market broker like Protect Line to help you find the cheapest and most suitable cover for your needs.

Get a free life insurance quote today

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How much are Funerals?

The average cost of a funeral in the UK in 2020 was £4,184*. On average, a cremation was £1,148 cheaper than a burial.

TYPE OF FUNERAL	2019 AVERAGE COST	2020 AVERAGE COST	CHANGE
Funeral (average)	£4,115	£4,184	+1.7%
Burial	£4,975	£5,033	+1.2%
Cremation	£3,858	£3,885	+0.7%

^{SunLife (2021), Cost of Dying Report, sunlife.co.uk/costofdying2021}

Funeral costs vary across the country. If you live in a city centre, it may surprise you how much more than the UK average your funeral may cost. You may also want to consider any extras or personalised choices you may wish to request, such as flowers or an eco-friendly funeral.

In addition, you may want to consider more than just the cost of a funeral. The cost of dying may also include optional extras such as the send-off and professional fees:

• Average cost of a basic funeral: £4,184
  Fees for the cremation or burial, funeral director, doctor and minister or celebrant.
• Average amount spent on the send-off: £2,532
  The memorial, the death and funeral notices, flowers, order sheets, limousines, the venue, and drinks/catering for the wake.
• Average amount spent on professional fees: £2,547
  Hiring a professional to administer the estate.

Total cost of dying = £9,263^[2]

Should I take critical illness cover with my life insurance policy?

Life insurance deals can be confusing enough on their own, let alone another type of policy. Yet 1 in 2 of us will get cancer in our lifetime and many have no financial protection in place should the worst happen.

Critical Illness usually covers a list of specified illnesses. These will include Cancer, Heart Attacks, Strokes and usually many more. However, the definitions of these illnesses can vary greatly between insurers. The minimum definition is governed by the ABI (Association of British Insurers), however these days most insurers go way beyond what is required by the ABI.

No-one can be fully prepared for how critical illness could change their lives. The combined emotional and financial toll can be an enormous strain even for the strongest of families. With advances in medical technology, more and more people are surviving their illness. While this is fantastic news, it means more families need to deal with a slow recovery process.

Policy holders are at least 50% more likely to claim on a Critical Illness policy than a term life insurance policy. ^[3]

So how much more expensive is critical illness than term life insurance? As you can see from the illustration below, it is perceived more expensive. However, if you’re considering what may happen to your family financially, should you die? Consider what would be different if you were to be diagnosed with a critical illness and unable to work? How long would your sick pay payout for?

The table below shows the difference in cost between Life, Critical illness and Life with Critical Illness. It may surprise you at how cheap it is to include life with your critical illness. However, you must remember that you can usually only claim once. So it will be a claim for life or critical illness, whichever happens first. So you may want additional life cover if you think you’ll use the critical illness to cover your bills or pay for private medical treatment, etc.

Amount	Cover	Term	Basis	Premium
£250,000	Life Only	25 Years	Level	£10.89
£250,000	Critical Illness	25 Years	Level	£112.79
£250,000	Life + Critical Illness	25 Years	Level	£115.18

_{*Quotes generated using Iress on 30/06/2021 for a male non-smoker who is 33 years old.}

We cannot all cover ourselves for every eventuality but sometimes people take a smaller amount of critical illness cover on top of their life cover. That way you may have one or two years’ worth of your net pay covered should you need it.

As with every type of cover, there are pro’s and con’s to critical illness. It pays to shop around and ask your broker to clearly explain the differences between your top quotes. You can then pick the level of cover that suits you.

Will my credit score affect the price of life insurance?

No. Your broker should not need to check your credit score nor should your life Insurance premium be affected by your credit history. However, your broker may need to run a standard check to ensure your name does not appear on any anti-money laundering or sanctions lists.

What is the process for taking out a life insurance policy?

Deciding what cover you want can seem daunting at first, but it needn’t be. Life insurance brokers can give you all the facts you need to make an informed choice. The best bit is that many offer a fee free service. Brokers are paid a commission by your chosen insurer if you decide to take out a policy. This enables brokers to give you their time, knowledge and experience without the need to charge an upfront fee.

All you need to do is think about what’s important to you, a realistic budget for your cover, and write down any medical conditions to help you on your call.

Once you’re ready to talk, simply go to protectline.co.uk to request your bespoke quote. 

Get a free life insurance quote today

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