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What is the average cost of life insurance?

LifeSearch author John Rogers
4 min read

by John Rogers, Marketing Executive

See author bio

John is a Protection expert, having worked in our customer facing teams and best practice teams, and now is immersed in Protection Content and Marketing. See author bio

Guide last reviewed 10 Oct 2023

We’d be lying if we said we could tell you what the average cost of life insurance is. With so many different people, lifestyles and providers out there, there’s just no one-size-fits-all solution. What we can tell you however, is that life insurance doesn’t have to be expensive and for most people, is very affordable when bought wisely. 

What will life insurance cover me for?

Let’s start with the basics. Life insurance is essentially peace of mind and financial protection for you and your family. It’s designed to pay a lump sum when you pass away in order to look after your family financially. The amount of money paid out depends on the level of cover you buy. The more cover you buy and thus the more you pay month-to-month in premiums, the bigger the payout you’ll receive. 

There are two main types of life insurance - term life insurance and whole of life insurance. Term life insurance runs for a fixed period of time (known as the ‘term’ of your policy), for instance 10, 20 or 30 years. You choose how long you want your term to last. This could be until your children have grown up, moved out and become financially dependent at say, 18-21 years old. This could be until your mortgage is paid off and you’ll naturally have more cash in the bank. Term life insurance will only pay out if you pass away during your policy. There’s no lump sum available if the term ends and you’re still around.

A whole of life policy will pay out no matter when you pass away, so long as you keep up those monthly payments. It quite literally will last the whole of your life. For this reason, this product is naturally the more expensive option of the two. If you’re looking for the most comprehensive cover, you might want to choose whole of life insurance. If you’re looking to save the pennies, opt for term life insurance.

What else will determine how much I pay for life insurance?

Although there are choices regarding your policy that you can make - such as choosing whole of life or term life insurance - there are factors that affect pricing that are out of your control. These include your age, lifestyle, medical history and any pre-existing health issues. 

The higher risk you’re deemed to be, the more expensive your premiums will be. For instance, if you smoke and drink more than the recommended units of alcohol per week, you’ll be faced with higher premiums. Age is also an important one, and how far away from retirement you are. If you are young and healthy, life insurance premiums can be really reasonable so this is definitely the time to take out your policy - even if it might not feel like a priority.

Ok, so how much will it actually cost me?

Again, it’s different for everybody - but here’s some ballpark figures to give you a vague idea. You can probably get around £200,000 of cover for less than £10 per month if you are in your late 20s, are in good health and not a smoker [1]. If you are older and/or have a complex medical history, then £10 won’t get as much - perhaps nothing at all.

Some people might pay upwards of £50 per month, but have more comprehensive cover. It’s all relative. Consider your own financial situation and how much you can afford to pay. Think about the size of your mortgage, other debts and financial commitments and whether you have any personal savings behind you that could be left to help dependents.

What should I consider when choosing my level of cover?

Some say that a reasonable amount for life insurance is 6 to 10 times the amount of your annual salary, or to multiply your annual salary by the number of years left until retirement. That’s a good way of working out a rough figure, but there’s more to consider.

If you have debts, you’ll probably want to make sure that they aren’t passed on for your loved ones to deal with. You should consider taking out a policy that’s big enough to replace your income, plus a little extra to cover inflation.

Mortgages are the main thing that people have in mind when taking out life insurance. It’s probably your single biggest outgoing and you might want to make sure that it can be paid off when you’re no longer around. The last thing your family is going to want to do when dealing with grief is to have to sell up and move from their home because they can’t keep up the mortgage repayments with one less salary.

Let’s say for example that you have a £250,000 mortgage and a £5,000 car loan. You’ll need at least £255,000 in your policy to cover these debts. If you are the only provider for your dependents and you bring in £50,000 a year, you’ll need a policy payout that’s large enough to replace this.

Although we all want life insurance to be affordable, it’s about so much more than that. It’s about protection and peace of mind - those things that you just can’t put a price on. Life insurance will forever be worth the money if you have loved ones that you’d leave behind if anything was to happen to you.



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LifeSearch author John Rogers
John Rogers Marketing Executive
A ‘Searcher since 2015, John is a Protection expert having worked in our customer facing teams and best practice teams, and now is immersed in Protection Content and Marketing.
See all articles by John Rogers
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