5 Reasons Your Life Insurance May Be Higher Than Average

Recent internal research from leading life insurance broker Reassured concluded that the average cost of life insurance, in the UK, is £38.15.

This figure was calculated based on 142,576 term life insurance policies sold between 08/09/21 – 08/09/22 with an average cover amount of £151,972.

If you’re paying more than this, it could be worth evaluating why. With many of us having to save money where we can, consider whether making a few lifestyle changes, or securing a new policy, is a good option for you.

If you’re a parent, trying your best to juggle family life during a cost-of-living crisis, you will want your invaluable life insurance policy to be as affordable as possible.

Whilst this article is primarily aimed at our growing UK audience, many of the principles will extend to our US users and beyond.

Here are 5 key things to consider for our which could help you lower your monthly premiums …

1. Your age can impact your premiums

Generally, the older you are, the more you will have to pay for life insurance.

This may seem unfair, but the sad truth is we become more susceptible to health issues as we get older. Plus, our bodies have to work harder to recover.

In the eyes of an insurer, this increases the risk of offering you coverage and to mitigate this, they quote more expensive premiums.

A 20-year-old non-smoker (in good health), taking out a level term life insurance policy with a policy term of 20 years and £100,000 of cover, could pay as little as £3.59 a month, compared to a 50-year-old who could pay £17.26 a month for the same policy terms.

The good news is that prices vary between providers – so comparing quotes with a life insurance broker or a comparison website, could help you secure a more affordable life insurance policy.

It’s also important to note that if your policy no longer reflects your personal circumstances, a new policy may be required.  However, you may struggle to find a cheaper policy with similar terms due to your age.

Life insurance premiums are fixed and agreed upon during the application process. So, if you secured a policy 10 years ago and were now looking to replace it for a similar policy with cheaper premiums, you’re unlikely to find a less-expensive alternative.

2. Are you a smoker?

It’s no secret that smoking can cause an array of health complications, while also being a costly habit.

For those who smoke, life insurance premiums are also significantly higher due to the associated health risks.

If you’re a smoker older than 35 years old, your premiums could be costing twice as much as those who don’t smoke, despite having the same policy terms.

It’s certainly possible to secure life insurance if you’re a smoker but kicking the habit (usually for at least a year) can result in you securing a policy with more favourable premiums and terms.

Insurers classify a non-smoker as someone who has been nicotine free for a minimum of 12 months. This includes vaping, nicotine gum and patches. However, this could be as long as 5 years with some providers.

3. Do you have a pre-existing medical condition?

A pre-existing medical condition is defined as a condition which exists before or at the time of securing life insurance.

While many people are put off from securing life insurance when they have medical issues, a high percentage can still secure coverage. If you have a manageable condition which doesn’t drastically impact your daily life and hasn’t resulted in hospitalization or time out of work, you may find very little difference in the cost of your premiums.

However, for those with reoccurring conditions or a family history of certain medical ailments, you may experience either a loading (increased price) on your premiums, your condition excluded from your coverage, or having your application denied.

Many conditions will not impact your ability to obtain life insurance. However, when a condition is excluded from your cover, your loved ones may not be entitled to the sum assured (pay out amount) if you were to pass away due to your condition.

This can be negated if you’re a UK resident aged between 50-85, by securing a life insurance policy, known as over 50s life insurance, which requires no medical information to be disclosed.

4. Have you secured a cover which doesn’t quite meet your needs?

While the end result of providing a lump sum payment to your loved ones if you pass away is the same, there are multiple life insurance policy options to consider. If you secure a policy which doesn’t reflect your needs, you may find you’re paying more than is necessary.

This can be split into two areas – your reasons for securing life insurance and the type of cover you purchase.

✅ There are 4 types of life insurance:

• Level term life insurance – This has a fixed sum assured and premiums. Will provide cover for a specified period, usually between 2-40 years.

• Decreasing term life insurance – The sum assured decreases over the policy lifetime. Premiums are fixed and also provides cover for a set period, usually between 2-40 years.

• Whole of life insurance – A more expensive policy that lasts for life. Premiums are fixed and a pay out is guaranteed when you pass away (providing your premiums are up to date).

• Over 50s life insurance – A plan for UK residents aged 50-85. The maximum sum assured is substantially less, but no medical information is required.

✅ Often, life insurance is taken out to cover:

• Mortgage
• Family living costs
• Funeral costs
• Outstanding debts
• An inheritance

Let’s say you wish to secure life insurance solely for covering a repayment mortgage. In this case, you will only need cover for this period.

In this scenario, decreasing term life insurance can be most suitable as you can set your term length to mirror your mortgage term and your sum assured can reduce in line with your remaining mortgage balance.

The whole of life insurance (life assurance), may not be suitable as you would be paying premiums for the rest of your life (even after your mortgage is paid off) – meaning you’d be paying higher premiums, over a long period, for cover that isn’t necessary.

A 25-year-old could take out decreasing term life insurance (with a 20-year term and £100,000 of cover) from just £3.50 per month, compared to £71.07 per month for the whole of life insurance (with £100,00 of cover) – making decreasing term life insurance over 20 times cheaper!

Establishing why you require to cover, alongside your personal circumstances, can be hugely influential in securing the best deal.

5. Shop around for your best quote

It’s beneficial to shop around for many things, and life insurance is no exception.

It may seem like a daunting process having to compare multiple policies from many companies. So, understandably, many people choose the first life insurance policy they find.

Fortunately, life insurance brokers like Reassured can compare multiple life insurance quotes from some of the UK’s biggest life insurance brokers and smaller specialists.

By leaving it to a professional, you can save time and money, stress-free. Furthermore, quotes secured through a reputable broker are personalized, no-obligation and often completely free.

📌 Secure the best life insurance for you

Despite these being 5 crucial points why your life insurance could be higher than average, this is only the tip of the iceberg.

You can check Reassured’s in-depth article on the average life insurance cost UK. You’ll find a breakdown on the average cost of each product, what to consider, and how life insurance can be impacted by things within and out of your control.

You shouldn’t have to pay more than necessary for your coverage. With a little bit of research and help in the right place, you could save some of your hard-earned money. Allowing you to sit back and relax, safe in the knowledge your loved ones are provisioned for whatever the future may hold.