What Is Life Insurance 2024?
Understanding how life insurance works and how to shop for a policy can help you find the best coverage to meet your family’s needs.
Life insurance is a contract between an insurance company and a policy owner in which the insurer guarantees to pay a sum of money to one or more named beneficiaries when the insured person dies in exchange for premiums the policyholder pays during their lifetime. The best life insurance companies have good financial strength, a low number of customer complaints, high customer satisfaction, several policy types available, optional riders, and easy application processes.
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What is the Average Cost of Life Insurance in the UK?
The average cost of life insurance in the UK in 2024 is £9.71 for a single life insurance policy and £16.81 for a joint life insurance policy to protect you and your partner. Life insurance premiums start from as little as £3.50 per month from top UK life insurance companies such as Aviva, AIG, and Legal & General.
Most UK households will spend around £30 – £40 per month on insurance policies to protect their homes and their families. This can be in the form of one or more life insurance policies, as well as other useful policies like critical illness insurance or income protection insurance.
While it is helpful to understand the average cost of life insurance, the actual price will be different for each person depending on their age, health, and how much cover they need. This guide explains how the average cost of life insurance UK 2024 works and answers the top questions that people ask about what they should expect to pay for life cover to protect their loved ones.
What is the average cost of life insurance in the UK?
Based on our most recent research, the average cost of life insurance in the UK is around £9.71 per month to protect your mortgage or your family. The average cost of joint life insurance is slightly higher (£16.81 per month), but this protects both you and your partner in one policy which can be simpler and easier to manage.
When working out these figures, our insurance experts used statistics for the average age at which UK residents will now buy a home and have a family, which is around 34 years old. This is the point at which many people consider buying life insurance for the first time, to provide financial protection and peace of mind for their loved ones.
Below, we have the most recent figures for life insurance pricing which has been taken from our live pricing software. This highlights how affordable life insurance can be, with many policies costing less than a Netflix subscription (£10.99) or not much more than the average price of a cup of coffee (around £5).
How does the life insurance calculator work?
Our calculator can give you an idea of how much life insurance you might need in a matter of minutes. When using our life insurance cost calculator, we ask you:
- How much you’d like to leave to your dependants
- The balance on your outstanding mortgage, if you have one
- Any future costs, such as credit card payments or funeral expenses
- Details of any existing life cover you have that would pay out if you die.
This is how life insurance premiums are calculated. Once we have these details, we’ll show you the total amount of cover you might need, based on the information you’ve provided.
You can then opt to get advice from our partners at LifeSearch. Alternatively, if you don’t feel you need advice, we’ll show you quotes from a list of providers that fit your criteria.
Remember, our life insurance calculator is just for guidance. You’ll have to choose the type of policy that’s right for your needs, and other factors may also affect your premium.
Average cost of £200,000 of life insurance over 25 years
| Age of applicant | Life Insurance cost – non-smoker | Life Insurance cost – smoker | Life Insurance cost – medical history |
| 20 | £4.43 (Aviva) | £6.68 (Aviva) | £7.75 (iam) |
| 25 | £5.65 (Aviva) | £9.10 (L&G) | £9.89 (iam) |
| 30 | £7.37 (Aviva) | £12.62 (Guardian) | £12.90 (iam) |
| 35 | £10.28 (Vitality) | £19.63 (Guardian) | £17.99 (iam) |
| 40 | £15.27 (Zurich) | £31.42 (Guardian) | £26.72 (iam) |
| 45 | £23.70 (L&G) | £54.32 (Guardian) | £41.47 (iam) |
| 50 | £38.17 (AIG) | £88.66 (AIG) | £66.80 (iam) |
*Our team of life insurance experts regularly reviews the market and updates these figures with the latest premiums from our live pricing software.
How do I calculate the average cost of life insurance?
There are various tools and calculators online that can help you to work out how much life insurance you need. This includes our Life Insurance Calculator which our experts have developed using over 25 years of expertise.
Tools like this can help you to understand how much protection is right for your family, and how much this might cost each month. You should try to choose a life insurance policy that will be affordable long term, and you can review your policy at any point to check that it still offers the right level of cover for what you need.
Life Insurance Calculator
Life Insurance Case Studies
Our life insurance experts have selected the examples below to demonstrate how your age, health, and even the insurance company you choose can affect the price of your life insurance premiums.
As you can see, you could pay more than the average cost of life insurance based on your own situation, but life insurance prices are often still very reasonable.
| Details of applicant | Mr R. was born in 1991 and is a non-smoker. |
| Health details and information | Mr R. was diagnosed with Crohn’s disease in 2003. He had a total colectomy in 2021. |
| Other health details | Height: 5’10” / Weight: 11st3 |
| Cover requirements | Mr R. wanted £175,000 of decreasing life insurance to protect his mortgage over the next 34 years. |
| Monthly premiums (£s) | £17.27 per month Guaranteed (fixed) premiums |
| Details of applicant | Mrs S. was born in 1968 and is a non-smoker. |
| Health details and information | Mrs S. has Type 1 diabetes which was diagnosed in 2011 (Hba1c reading of 68mmol). |
| Other health details | Height: 5’8” / Weight 16st7 |
| Cover requirements | Mrs S. wanted £70,000 of level term life insurance to protect her family over the next 5 years. |
| Monthly premiums (£s) | £30.58 per month Guaranteed (fixed) premiums |
| Details of applicant | Mr G. was born in September 1973 and is a non-smoker. |
| Health details and information | Mr G. had a heart attack only 8 months before applying for life cover and is also a Type 1 diabetic. |
| Other health details | Height: 6ft / Weight: 18st |
| Cover requirements | Mr G. wanted £82,000 of decreasing life insurance to protect his mortgage over the next 9 years. |
| Monthly premiums (£s) | £28.89 per month Guaranteed (fixed) premiums |
What affects the average cost of life insurance?
There are a wide range of factors that help a life insurance company to decide how much your life insurance policy will cost each month. Every life insurance company will have their own pricing structure, which is why it is important to compare quotes from multiple insurers as prices can vary significantly.
Top elements for calculating the average cost of life insurance:
- Age – Life insurance premiums will generally get higher as you get older, due to a higher risk of becoming seriously ill or dying during your policy term. It’s best to buy life insurance as early in life as you can, to get the most affordable prices.
- Smoker status – Smokers are naturally considered to be a higher risk due to the health risks connected to smoking, vaping, and use of nicotine products.
- Type of cover (e.g. family life insurance or mortgage life insurance) – Family life insurance premiums are higher than mortgage life insurance premiums for example.
- Amount of cover (£’s) – Having more cover will naturally cost more money, and so you should expect to pay more each month for higher amounts of cover.
- Term of policy (years) – You might think that a longer term policy could be cheaper, in fact it’s the other way around. Longer term policies are generally more expensive, because you’ll be older at the end of the term and a higher risk.
How much life insurance is ‘normal’?
There isn’t a set ‘right’ amount of life insurance to have, though financial experts like Martin Lewis recommend that you have enough financial protection to cover at least 10x the main breadwinner’s salary.
Based on statistics from the 2022 Office for National Statistics Annual Salary of Hours and Earnings, the average salary in the UK ranges from around £13,237 – £38,574 per year. If you think about the ‘Ten Times Rule’, this means that you should aim to have a minimum of between £132,370 – £385,740 of life cover based on your own circumstances.
https://www.youtube.com/embed/IysZr5lKBUI?feature=oembedMartin Lewis’ Guide to Life Insurance – How Much? | This Morning
Ideally, your life insurance policy should provide enough support to help your loved ones avoid financial difficulties and support them with essential expenses like funeral costs. Some people even choose to have multiple life insurance policies to help in different scenarios (e.g. a mortgage life insurance policy and a family life insurance policy).
There isn’t a ‘one size fits all’ solution, so you should consider what might be the right amount of cover for your loved ones and get proper advice if you are unsure.
Is family life insurance or mortgage life insurance cheaper?
Mortgage life insurance is generally cheaper than family life insurance, as your cover amount will reduce in line with repaying your mortgage balance. Our insurance experts have compared the average prices for family life insurance vs mortgage life insurance in the tables below.
Average cost of £100K life insurance – comparison
| Your Age | Family Life Insurance | Mortgage Life Insurance |
| 25 | £3.74 (Aviva) | £3.09 (HSBC) |
| 35 | £5.79 (Vitality) | £4.65 (AIG) |
| 45 | £13.20 (Vitality) | £8.85 (AIG) |
| 55 | £34.53 (Zurich) | £19.44 (AIG) |
Average cost of £200K life insurance – comparison
| Your Age | Family Life Insurance | Mortgage Life Insurance |
| 25 | £5.65 (Aviva) | £4.61 (HSBC) |
| 35 | £10.28 (Vitality) | £6.73 (AIG) |
| 45 | £23.70 (L&G) | £14.79 (AIG) |
| 55 | £64.68 (L&G) | £35.64 (AIG) |
Average cost of £500K life insurance – comparison
| Your Age | Family Life Insurance | Mortgage Life Insurance |
| 25 | £11.14 (Guardian) | £7.76 (HSBC) |
| 35 | £21.16 (Guardian) | £13.27 (AIG) |
| 45 | £51.87 (Zurich) | £33.59 (AIG) |
| 55 | £145.16 (Aviva) | £94.13 (AIG) |
What is the average cost of joint life insurance?
The average cost of joint life insurance UK 2024 is £16.84 for £200,000 of family life insurance (level term insurance) over 25 years. Joint life insurance provides cover for couples and parents to give them financial protection to pay out once if one parent dies.
It can be more confusing to work out the average cost of joint life insurance, because often couples are not the same age and age does affect the price of life insurance. Another issue is that one partner might have medical conditions or be a smoker, which would also affect the price.
It’s often better to opt for two single life insurance policies, as this can be more cost-effective in the long run. This also means that your children would receive a pay out on each parent’s death, so your children have double the protection. There is actually very little price difference, and most life insurance specialists would recommend 2 single life policies to provide you with better value for money.
Example price comparison – single vs joint life insurance
| Amount of cover | Life 1 – 35 year old non-smoker | Life 2 – 30 year old non-smoker | Joint life insurance |
| £100,000 of family life insurance (25 year term) | £5.79 (Vitality) | £4.73 (Aviva) | £9.31 (Vitality) |
| £150,000 of family life insurance (25 year term) | £8.22 (Vitality) | £5.67 (Aviva) | £12.35 (Zurich) |
| £200,000 of family life insurance (25 year term) | £10.28 (Vitality) | £7.37 (Aviva) | £15.34 (Zurich) |
What is the average cost of life insurance for smokers?
The average cost of life insurance for smokers 2024 in the UK is £31.42 for £200,000 of family life insurance (level term) over 25 years. Smokers and anyone using nicotine-based products (e.g. vapes and patches) will automatically pay higher premiums for life insurance, due to the higher risk of serious conditions like lung cancer.
In the table below we compare the average cost of life insurance for smokers and non-smokers to show the difference between the two. Premiums are based on £200,000 of Family Life Insurance over a 25 year term with no pre-existing medical conditions.
Example price comparison – life insurance for smokers
| Age | Smoker premiums | Non-smoker premiums | Price difference |
| 30 | £12.62 (Guardian) | £7.37 (Aviva) | £5.25 (42%) |
| 35 | £19.63 (Guardian) | £10.28 (Vitality) | £9.35 (48%) |
| 40 | £31.42 (Guardian) | £15.27 (Zurich) | £16.15 (51%) |
| 45 | £54.32 (Guardian) | £23.70 (L&G) | £30.62 (56%) |
| 50 | £88.66 (AIG) | £38.29 (L&G) | £50.37 (57%) |
What is the average cost of whole life insurance?
Whole life insurance has been designed to help with things like Inheritance Tax planning and funeral costs, and it costs more as it is guaranteed to pay out on death. The average cost of whole of life insurance will always be considerably higher than a term life insurance policy, which will generally only cover you up to age 90.
To demonstrate this, our insurance experts have compared the cost of several term life insurance vs whole life insurance policies in the table below.
Example price comparison – whole of life vs term life insurance
| Age | Whole of life insurance | Term life insurance | Price difference |
| 30 | £79.32 (Vitality) | £14.89 (Guardian) | £64.43 (81%) |
| 35 | £103.21 (Royal London) | £20.74 (Guardian) | £82.47 (80%) |
| 40 | £123.89 (Aviva) | £29.96 (Guardian) | £92.93 (76%) |
| 45 | £146.08 (AIG) | £38.67 (Guardian) | £107.41 (73.5%) |
| 50 | £165.67 (AIG) | £54.19 (Vitality) | £111.48 (67%) |
Our findings from this research shows that the average cost of life insurance for long term policies to age 90 has significantly reduced in the past 12 months. Our previous pricing tables for this particular product were 20-30% higher in 2023 and we can see that Guardian are extremely competitive in this space.
Life Insurance Buying Guide
Step 1: Determine How Much You Need
Think about what expenses would need to be covered in the event of your death. Consider things such as mortgage, college tuition, credit cards, and other debts, not to mention funeral expenses. Also, income replacement is a major factor if your spouse or loved ones will need cash flow and are not able to provide it on their own.
There are helpful tools online to calculate the lump sum that can satisfy any potential expenses that would need to be covered.
Step 2: Prepare Your Application
Life insurance applications generally require personal and family medical history and beneficiary information. You may need to take a medical exam and will need to disclose any preexisting medical conditions, history of moving violations, DUIs, and any dangerous hobbies (such as auto racing or skydiving). The following are crucial elements of most life insurance applications:
- Age: This is the most important factor because life expectancy is the biggest determinant of risk for the insurance company.
- Gender: Because women statistically live longer, they generally pay lower rates than males of the same age.
- Smoking: A person who smokes is at risk for many health issues that could shorten life and increase risk-based premiums.
- Health: Medical exams for most policies include screening for health conditions such as heart disease, diabetes, and cancer, plus related medical metrics that can indicate health risks.
- Lifestyle: Dangerous occupations and hobbies can make premiums much more expensive.
- Family medical history: If there is evidence of major disease in your immediate family, your risk of developing certain conditions is much higher.
- Driving record: A history of moving violations or drunk driving can dramatically increase the cost of insurance premiums.
Standard forms of identification will also be needed before a policy can be written, such as your Social Security card, driver’s license, or U.S. passport.
Step 3: Compare Policy Quotes
Once you’ve assembled all of your necessary information, you can gather multiple life insurance quotes from different providers based on your research. Prices can differ markedly from company to company, so it’s important to make the effort to find the best combination of policy, company rating, and premium cost. Because life insurance premiums are something you will likely pay monthly for decades, finding the policy that best fits your needs can save you an enormous amount of money.
Benefits of Life Insurance
There are many benefits to having life insurance. Below are some of the most important features and protections offered by life insurance policies.
Most people use life insurance to provide money to beneficiaries who would suffer a financial hardship upon the insured’s death. However, for wealthy individuals, the tax advantages of life insurance, including the tax-deferred growth of cash value, tax-free dividends, and tax-free death benefits, can provide additional strategic opportunities.
Avoiding Taxes
The death benefit of a life insurance policy is usually tax-free.3 It may be subject to estate taxes, but that’s why wealthy individuals sometimes buy permanent life insurance within a trust. The trust helps them avoid estate taxes and preserve the value of the estate for their heirs.
Tax avoidance is a law-abiding strategy for minimizing one’s tax liability and should not be confused with tax evasion, which is illegal.
Who Needs Life Insurance?
Life insurance provides financial support to surviving dependents or other beneficiaries after the death of an insured policyholder. Here are some examples of people who may need life insurance:
- Parents with minor children. If a parent dies, the loss of their income or caregiving skills could create a financial hardship. Life insurance can make sure the kids will have the financial resources they need until they can support themselves.
- Parents with special-needs adult children. For children who require lifelong care and who will never be self-sufficient, life insurance can make sure their needs will be met after their parents pass away. The death benefit can be used to fund a special needs trust that a fiduciary will manage for the adult child’s benefit.
- Adults who own property together. Married or not, if the death of one adult might mean that the other could no longer afford loan payments, upkeep, and taxes on the property, life insurance may be a good idea. One example would be an engaged couple who take out a joint mortgage to buy their first house.
- Seniors who want to leave money to adult children who provide their care. Many adult children sacrifice time at work to care for an elderly parent who needs help. This help may also include direct financial support. Life insurance can help reimburse the adult child’s costs when the parent passes away.
- Young adults whose parents incurred private student loan debt or cosigned a loan for them. Young adults without dependents rarely need life insurance, but if a parent will be on the hook for a child’s debt after their death, the child may want to carry enough life insurance to pay off that debt.
- Children or young adults who want to lock in low rates. The younger and healthier you are, the lower your insurance premiums. A 20-something adult might buy a policy even without having dependents if they expect to have them in the future.
- Stay-at-home spouses. Stay-at-home spouses should have life insurance as they contribute significant economic value based on the work they do in the home. According to Salary.com, the economic value of a stay-at-home parent would be equivalent to an annual salary of $184,820.
- Wealthy families who expect to owe estate taxes. Life insurance can provide funds to cover the taxes and keep the full value of the estate intact.
- Families who can’t afford burial and funeral expenses. A small life insurance policy can provide funds to honor a loved one’s passing.
- Businesses with key employees. If the death of a key employee, such as a CEO, would create a severe financial hardship for a firm, that firm may have an insurable interest that will allow it to purchase a key person life insurance policy on that employee.
- Married pensioners. Instead of choosing between a pension payout that offers a spousal benefit and one that doesn’t, pensioners can choose to accept their full pension and use some of the money to buy life insurance to benefit their spouse. This strategy is called pension maximization.
- Those with preexisting conditions, such as cancer, diabetes, or smoking. Note, however, that some insurers may deny coverage for such individuals or charge very high rates.
Life Insurance Riders and Policy Changes
Many insurance companies offer policyholders the option to customize their policies to accommodate their needs. Riders are the most common way policyholders may modify or change their plans. There are many riders, but availability depends on the provider. The policyholder will typically pay an additional premium for each rider or a fee to exercise the rider, though some policies include certain riders in their base premium.
- The accidental death benefit rider provides additional life insurance coverage in the event the insured’s death is accidental.
- The waiver of premium rider relieves the policyholder of making premium payments if the insured becomes disabled and unable to work.
- The disability income rider pays a monthly income if the policyholder becomes unable to work a certain period of time (usually several months) due to a serious illness or injury.
- Upon diagnosis of terminal illness, the accelerated death benefit rider allows the insured to collect a portion or all of the death benefit while still living.
- The long-term care rider is a type of accelerated death benefit that can be used to pay for nursing-home, assisted-living, or in-home care when the insured requires help with activities of daily living, such as bathing, eating, and using the toilet.
- A guaranteed insurability rider lets the policyholder buy additional insurance at a later date without a medical review.
Borrowing Money
Most permanent life insurance accumulates cash value that the policyholder can borrow against. Technically, you are borrowing money from the insurance company and using your cash value as collateral. Unlike with other types of loans, the policyholder’s credit score is not a factor. Repayment terms can be flexible, and the loan interest goes back into the policyholder’s cash value account. However, if you don’t pay them back, policy loans can reduce your death benefit.
Funding Retirement
Policies with a cash value or investment component can provide a source of retirement income. This opportunity can come with high fees and a lower death benefit, so it may only be a good option for individuals who have maxed out other tax-advantaged savings and investment accounts. The pension maximization strategy described earlier is another way life insurance can fund retirement.
Who Needs Life Insurance?
You need life insurance if you need to provide security for a spouse, children, or other family members in the event of your death. Life insurance death benefits can help beneficiaries pay off a mortgage, cover college tuition, or help fund retirement. Permanent life insurance also features a cash value component that builds over time.
What Factors Affect Your Life Insurance Premiums?
- Age (life insurance is less expensive)
- Gender (female tends to be less expensive)
- Smoking (smoking increases premiums)
- Health (poor health can raise premiums)
- Lifestyle (risky activities can increase premiums)
- Family medical history (chronic illness in relatives can raise premiums)
- Driving record (good drivers save on premiums)
What Are the Benefits of Life Insurance?
- Payouts are tax-free. Life insurance death benefits are paid as a lump sum and are not subject to federal income tax because they are not considered income for beneficiaries.
- Dependents don’t have to worry about living expenses. Most policy calculators recommend a multiple of your gross income equal to seven to 10 years that can cover major expenses such as mortgages and college tuition without the surviving spouse or children having to take out loans.
- Final expenses can be covered. Funeral expenses can be significant and can be avoided with a burial policy, or with standard term or permanent life policies.
- Policies can supplement retirement savings. Permanent life policies such as whole, universal, and variable life insurance can offer cash value in addition to death benefits, which can augment other savings in retirement.
How Do You Qualify for Life Insurance?
To qualify for life insurance, you need to submit an application. Life insurance is available to almost anyone. However, the cost or premium level can vary greatly based on your age, health, and lifestyle. Some types of life insurance don’t require medical information; however, no-exam policies generally have much higher premiums and involve an initial waiting period before the death benefit is available.
FAQs about Life Insurance:
- What is life insurance? Life insurance is a contract between an insurance company and a policyholder where the insurer promises to pay a sum of money to designated beneficiaries upon the death of the insured person.
- How does life insurance work? Policyholders pay premiums to the insurance company, and in return, the insurer pays out a death benefit to beneficiaries when the insured person passes away.
- What factors affect the cost of life insurance? Factors include age, health, smoking status, coverage amount, type of policy (e.g., term or whole life), and sometimes occupation or hobbies.
- What types of life insurance are there? There are primarily two types: term life insurance, which covers a specific period (e.g., 10, 20, or 30 years), and permanent life insurance (such as whole life or universal life), which covers the insured’s entire life and often includes a savings component.
- Do I need life insurance? If you have dependents who rely on your income or financial support, life insurance can provide them with financial stability in case of your death. It can also be useful for covering debts and funeral expenses.
Conclusion:
Life insurance serves as a crucial financial safety net for your loved ones in the event of your death, providing them with funds to cover immediate expenses and maintain their quality of life. Understanding the types of policies available, factors that influence premiums, and how to calculate your coverage needs is essential when choosing a policy. Whether you opt for term life insurance for temporary needs or permanent life insurance for lifelong coverage and cash value accumulation, the right policy can provide peace of mind knowing your family is protected financially. Evaluate your options carefully, consider seeking professional advice if needed, and review your policy periodically to ensure it continues to meet your needs as your circumstances change.