Written ByAlice CampionSenior Writer5 min read|Updated on 08/06/2023
The amount you pay for life insurance depends on your age and job to your health and lifestyle. And if you find yourself with higher insurance costs, there are a number of lifestyle changes you can make to try and reduce this.
What is a life insurance premium?
Your monthly or annual payment for your life insurance is your life insurance premium.
Your agreement with your insurer means that, provided you continue to make these payments, your life cover remains in place. It should pay out on your death when your family needs to make a claim.
How are life insurance premiums calculated?
What our home & lifestyle insurance expert says
"The top 3 factors that determine the cost of your life insurance premium are smoking, your age, and lifestyle factors such as how much you drink, your occupation and any health conditions that run in your family. Generally, the younger and healthier you are, the cheaper your life insurance premiums will be."
Matthew HarwoodHome & Lifestyle insurance expert
Other factors include:
- The type of life insurance policy you have
- The amount of life insurance cover you need
- Your personal circ*mstances
This all builds up a picture of you and the risk of you dying within the timeframe of the policy. The greater the risk, the higher your insurance costs are likely to be.
How do I calculate my life insurance premiums?
You can find out your life insurance premiums by calculating how much life insurance cover you need. Take a look at our life insurance calculator to work this out.
What factors affect how much you pay in life insurance premiums?
The factors that dictate how much you pay for life insurance can be divided into two categories:
- Those that are specific to the policy you want take out
- Those that are linked to your own personal circ*mstances
Timeframe
Insurers take into account how long you want the policy to last for. If you opt for level term life insurance, the policy only covers you for a pre-agreed period. This is usually 20 or 25 years.
With term insurance, the longer the term, the higher your premiums tend to be. This is because there’s more chance of the insurer having to make a payout.
Extent of cover
The more cover you want, the more it costs you every month. There’s typically a direct relationship between how much cover your policy provides and the premium. So, a policy for £200,000 might be twice as expensive as one which insures you for £100,000.
Level term or decreasing term
Level term insurance keeps the amount of cover the same throughout the policy. Decreasing term policies are also called mortgage life insurance because the extent of cover is designed to decrease over time as you pay off your mortgage.
Joint cover
Premiums for joint cover - usually for two people - are likely to be higher than on a single policy. The way a joint life insurance policyis set up might also affect the size of your premiums.
Your age
In general, the younger you are, the lower your life insurance premiums are.
This is more evident with term life insurance that runs for a fixed period of, say, 25 years. This is because younger policyholders are less likely on average to die within policy term.
Your occupation
If you’re employed in an occupation that an insurer classes as high-risk, you can expect to face higher premiums. So for example, office workers might pay less for life insurance than firefighters or HGV drivers, if other factors are equal.
Your lifestyle
When you apply for a life insurance policy, you’re asked questions about your lifestyle. These include how much exercise you do, whether you smoke and how much alcohol – if any – you drink in a typical week.
Your marital status
Some research suggests that married people might have longer life expectancy. This could be due to the emotional support they get from their spouses, as well as because they tend to eat more healthily, according to some studies.
Your height and weight
Insurers tend to see overweight or obese customers as having a higher risk of developing illnesses such as diabetes or heart disease.
Your health
Many life insurance applications ask you questions about your current state of health as well as any medical problems you might have had in the past. A history of serious illness could increase your premiums. It’s vital to fully disclose these details as well as any medication you’re taking. Failing to do so could result in your policy being cancelled or a claim being turned down.
Family history of illness
If certain hereditary diseases run in your family, this could affect how much you pay for life insurance. These can include diabetes, stroke and certain types of cancer. However, insurers consider how many relatives have been affected when deciding whether you should pay higher premiums.
How to cut the cost of your life insurance
By understanding the factors that influence life insurance costs, you might be able to look at reducing the cost.
- The sooner you take out a life insurance policy, the less it costs.
- Consider decreasing term insurance. If you want a life policy to ensure your family can stay in their home after your death, you could opt for decreasing life insurance. The amount of cover falls every year as you pay off your mortgage debt.
- Make lifestyle changes. Getting fit, stopping smoking and reducing alcohol intake are all good steps to lower life insurance premiums.
- Don't over insure yourself. Our life insurance calculator could help you work out the right level of cover given your family status as well as your mortgage and any other debts.
- Think about taking out a joint life insurance policy. A joint policy is usually cheaper than two separate individual policies.
