When you buy life insurance, the kind of cover that pays out a lump sum of money if you die, you’re making what will (hopefully) be a fairly long-term financial commitment. For that reason, consideration of how much it’s going to cost – and whether you’ll always be able to afford those ongoing monthly payments – is naturally very important.

The tricky part is that the cost of life insurance is highly variable, so working out whether it’s affordable for you can take a little extra research. One thing’s for certain: the price goes up with age. But there are lots of other factors that can affect how much life insurance will cost you personally, and it’s difficult to say life insurance will cost ‘this much’ without taking those things into account.

What affects the cost of life insurance?

When you buy a life insurance policy, the insurer will consider a number of factors relating to you and your lifestyle when deciding what your premiums will be – i.e. the amount you pay each month to be insured. This includes:

  • Your age
  • Your personal and family health history
  • Your lifestyle (e.g. whether you have a dangerous job or hobbies)
  • Your smoking status

Of course, factors relating to the actual life insurance cover you’re buying will also contribute to how much it costs:

  • The amount (how much life insurance cover you’re buying)
  • The type (whether you buy decreasing or level cover, for example)
  • The duration (how long your policy will last)

When’s the best time to buy life insurance?

Generally speaking, life insurance will be at its cheapest if you’re young and healthy. The premiums will go up with every birthday that passes, if you were to develop a health condition, for example, or take up a risky hobby.

You should always be totally honest about your health and lifestyle when applying for life insurance. The most common reason for a claim not being accepted further down the line is what’s known as ‘misrepresentation’ – i.e. not having been totally accurate and honest during the application process. To make sure your life insurance pays out if and when you need to, honesty really is the best policy.

Anorak tip: Life insurance is always more expensive if you’re smoker because insurers add what’s known as ‘smoker loading’ to the price. If you quit smoking, though, the price of life insurance may come down – as some insurers will remove the smoker loading if you’ve quit for at least a year. Here at Anorak, we can help point you to the best policies for you in that regard. Again, being honest about your smoking status during a life insurance application is absolutely essential.

How to minimise the cost of life insurance for you

As mentioned, the price of life insurance goes up with age – which isn’t something you can control. However, there are other things you can consider to keep the cost of life insurance down for you personally, relative to your age. These include:

  1. How much cover you really need
    Making sure you’ve factored in things like your partner’s future income, or the age at which your children will become financially independent, may mean you need less cover than you initially thought.
  2. How long you really need cover for
    Many people take out cover until their partner retires, but it could be that your partner would be able to support themselves financially before that time – thereby reducing the amount of time you really need to be covered for. Equally, there are other natural points at which your household’s expenses might reduce significantly – like a mortgage being paid off, or a child becoming financially independent. Factoring in your future needs in this way could reduce the policy term you need and therefore the monthly price you’ll pay to be covered now.
  3. What type of life insurance cover you really need
    When people think of life insurance, they typically think it’d pay out the same amount if you died now or in the future. This is what’s known as ‘level cover’ – in which the sum paid out always stays the same. But does everyone really need level cover?

    We often find that people’s financial responsibilities and vulnerabilities reduce as they get older – usually because of things like mortgages being paid off or children being able to support themselves. Young adults tend to have the greatest need for financial protection, because they have a large outstanding balance on a mortgage, or many years left in which they want to be able to provide for their family – but fast forward 10, 20, or 30 years, and that need for protection is likely to have reduced.

    With this in mind, it could be that ‘decreasing cover’ – which pays out gradually less over the term of your policy – is an option. Family income benefit could be another alternative. Both of these would be cheaper per month than level cover, while being perfectly adequate for your needs.

Price of life insurance for 25, 35 and 45 year olds

As we’ve already mentioned, lots of factors determine the price of life insurance. To give you an idea, here’s how much the monthly premiums would be for a fairly typical life insurance amount and policy duration, based on:

  • A healthy, non-smoking, male or female office worker
  • £300,000 of level life insurance cover for 25 years
  • Quoted on 14/04/2020
Insurer/product 25 year old 35 year old 45 year old Anorak review
Aegon
Personal Protection
£8.90 £14.32 £29.31 Read our Aegon life insurance review
AIG
YourLife Plan Term Assurance
£8.11 £13.29 £27.44 Read our AIG life insurance review
Aviva
Life Insurance +
£7.41 £14.51 £31.33 Read our Aviva life insurance review
Canada Life
Life Insurance
£8.88 £13.39 £30.52 Read our Canada Life life insurance review
Legal & General
Life Insurance
£7.24 £12.38 £29.09 Read our Legal & General life insurance review
LV=
Life Protection
£10.27 £14.48 £32.06 Read our LV= life insurance review
Royal London
Personal Menu Plan
£8.15 £13.88 £29.10 Read our Royal London life insurance review
Scottish Widows
Protect
£8.23 £15.14 £31.85 Read our Scottish Widows life insurance review
VitalityLife
Essentials Plan
£8.04 £13.30 £30.04 Read our VitalityLife life insurance review
Zurich
Personal Protection
£9.86 £13.58 £32.50 Read our Zurich life insurance review
  • The price of life insurance is influenced by you (namely your age, health and lifestyle) and the policy itself (the amount, term and type of the policy you buy)
  • The price of life insurance always goes up with age – the best time to buy is when you’re young and healthy, as that’s when you’ll secure the cheapest premiums
  • Factoring in the type, amount and length of cover you really need to meet your household’s unique future needs can help to minimise the price of life insurance for you
  • Being honest about your health and lifestyle during a life insurance application is essential (even if it pushes the prices up) – because being dishonest could invalidate a future claim

This post is intended for informative purposes only and does not constitute advice.