"How much does life insurance cost?" is a question we hear a lot.

Most customers are surprised at how cheap life insurance protection costs, and it is a known fact that the cost of life insurance has fallen significantly over the last 10 years. However, the price has started to flatten out so now is a great time to put life insurance in place.

Companies advertise life insurance from £1.50 per month, with larger names like Asda and Marks & Spencer advertising life insurance from £5 a month. However, it is sensible to not be distracted by the head-line rates and instead understand that the cost of your life insurance premiums is going to be determined by a list of variables that you can tailor to your particular requirements. Most customers do not change their life insurance policy after they have chosen it, so best to spend a bit more time now making sure you have the right cover so that it is there for you if you need to rely on it in the future.

What are the variables?

Ultimately a life insurance policy is simply a contract between an insurance provider and the policyholder which pays out on the occurrence of a stipulated event such as death or terminal illness. The life insurance company employs actuaries to calculate the likelihood of an insured event to happen, based on their propriety forecasting models and a vast amount of historic data.

Statistical Data

Depressing to think about, but mortality rates and other statistics are used to help calculate life insurance premiums. Using data such as life expectancy can help predict what percentage of policies the insurer will need to pay out on.

Type of Life Cover

You can choose to buy level term life insurance or decreasing term life insurance. Level term life insurance pays out the same lump sum during any stage of the policy. Decreasing term life insurance policy pays out a decreasing amount, and is often referred to as ‘mortgage life insurance’ because it can be made to reduce in-line with your outstanding mortgage. For this reason level term life insurance will be more expensive than decreasing term life insurance.

Amount of Cover

You can choose how much protection you want, the more protection you take out the more expensive the policy.

Who is the Cover Required For

You can choose joint cover or have cover just for yourself. The more people you introduce into a life insurance policy the more expensive.

Period

How long would your family or loved ones be able to cope financially if you were to die? You can decide on the length of your policy, the longer the policy the more expensive overall.

Critical Illness Cover

Including additional cover such as critical illness or terminal illness can add extra protection but will cost more. We always recommend to read the critical illness criteria carefully to make sure that the policy is suitable, as certain cancers and heart conditions are often excluded.

Take a look at our jargon-busting glossary for more information.

The cost of life insurance will be determined by the exact cover that you need. Speak to an expert and understand what type and amount of cover you need. Click on ‘Get a Free Life Quote’ and find your best value life insurance.

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