How can I reduce the cost of my life insurance?
Life insurance premiums vary, mainly due to age, lifestyle, and policy type.
Key takeaways
Age and any pre-existing medical conditions impact how much you will pay for life insurance.
Term life insurance policies are cheaper than whole-of-life policies
The more cover you need, the more you will pay
Smoking, excessive alcohol consumption and a high BMI could make buying cover more expensive
How much does life insurance cost?
Life insurance is a type of insurance policy that provides people named on the policy – beneficiaries – with a cash lump sum in the event of the policyholder’s death.
Policies on MoneySuperMarket start from just £2.60[1]Using the 51st percentile of cheapest premiums quotes, based on single non smoker policyholder aged under 30, with £100,000 of cover over a 10 year term with a decreasing term. Quoted between December 2023 and December 2024 a month. Life insurance premiums vary, mainly due to age, lifestyle, and policy type.
For various age groups, the average cost differs significantly. Younger people, especially in their 20s and 30s, generally pay lower premiums. This is because they are less likely to make a claim and so are less risky for insurers. However, as individuals age, premiums increase due to a higher risk of health issues.
It's essential to carefully consider which type of life insurance suits your needs and budget.
Why is the price of my life insurance so high?
Insurers will look at various risk factors to assess the likelihood of you dying during the term. The bigger the risk you represent, the more you will pay for life insurance.
The type of life insurance policy you choose will have a significant impact on the cost. Term life insurance, covering a specific period, usually has lower initial premiums. In contrast, whole-of-life policies cover a person’s entire lifetime and includes an investment component – so this type of policy will cost more. You can also get policies that increase premiums and payouts to take account of inflation – these will be more expensive too.
The more cover you require, the more expensive your policy will be. The longer the term, the more you will pay too.
What factors impact the cost of life insurance?
Several elements determine the price you pay for life insurance. Here's are some of the main factors:
Age
Generally, younger people pay less for life insurance. This is because they are less likely to make a claim. People become more likely to develop health issues as they age.
Health
You’ll be asked for various medical information when you apply, including any family history of certain conditions. You’ll pay more for cover if you have any pre-existing health conditions. Any health condition that increases the likelihood that the insurer will have to pay out during the policy will increase your premiums.
Lifestyle
Smokers pay more for cover, as will people who are obese, drink too much, or who have a dangerous job or hobby.
Policy term
The ‘term’ in life insurance is the period of time you’ll be covered for. For example, 30 years. The longer the term, the more a policy costs.
Tips for reducing life insurance costs
Gather quotes from multiple insurers to find the best rates. The cheapest option may not have all the features you want, so a comprehensive comparison can help you decide between different policies and premiums.
Term life insurance is less expensive than whole life insurance. It covers you for a specific period, making it a more cost-effective option.
Choose the right term
Choose a policy length that matches the needs of your household. For example, you might want a life policy that matches your mortgage term or runs until your children finish education.
Buy cover when you’re young
Life insurance is generally cheaper when you’re younger. Many people buy cover when they reach certain milestones such as buying a property jointly with someone else, getting married or having children.
Lead a healthy lifestyle
Lower premiums are often available to those in good health. Improve your lifestyle by quitting smoking, reducing alcohol intake, maintaining a healthy weight, and exercising regularly. Regular check-ups and effective management of chronic conditions are also important.
Don’t over-insure
Check if you already have cover via your employer.
Consider a joint policy
For a couples, a joint life insurance policy can be cheaper than two single policies. But joint policies only pay out once, on the death of the first person.