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Life Insurance Cost Factors in 2024

by | Jan 22, 2024

One of the most common questions that people have when they are considering buying Life Insurance surrounds Life Insurance cost. People often wonder how much Life Insurance will cost them. The answer is not simple, as there are several factors that affect Life Insurance cost. Some of these factors are related to the individual characteristics of the policyholder, such as their age, health, and lifestyle choices. Other factors are related to the features and options of the policy, such as the type, amount, and duration of coverage, the premium payment method, and the insurer’s risk assessment. In this blog, we will discuss the several factors that influence the cost of Life Insurance for a policyholder in the UK in 2024. We will also cover the latest statistics and trends in the UK Life Insurance market, in addition to the personal and policy cost factors that affect Life Insurance cost.

Life Insurance Cost Factors

The cost of Life Insurance is premiums is calculated using statistical analysis and mathematical equations during the underwriting process. The factors that affect the cost of Life Insurance premiums can be broken down into two categories: Personal cost factors and policy cost factors.

Personal cost factors include age, health status, and lifestyle choices such as smoking and drinking alcohol. In addition to personal cost factors, policy cost factors include the type of policy chosen, the length of the policy term, and the amount of coverage required. It is also possible for the cost of Life Insurance premiums to be influenced by external factors such as interest rates, inflation, and the state of the economy.

Some of the most common factors that affect Life Insurance cost are:

Type and amount of coverage

According to Forbes, the UK Life Insurance market is currently estimated at £71.4 billion, which is a 36% increase from 2021. There are different types of Life Insurance, such as term life, whole life, universal life, and variable life. Each type has its own features, benefits, and drawbacks.

Term Life Insurance is the cheapest and simplest form of Life Insurance, as it only provides coverage for a specified period of time, usually 10 to 30 years.

Whole Life Insurance is more expensive and complex, as it provides coverage for the entire life of the insured, as well as a cash value component that accumulates over time.

Universal life and variable life are similar to whole life, but they offer more flexibility and investment options. The amount of coverage, or the death benefit, is the sum of money that the insurer will pay to the beneficiary upon the death of the insured. The higher the amount of coverage, the higher the cost of Life Insurance.

Age of the person insured

Age is one of the most important factors that affects Life Insurance cost as it reflects the life expectancy of the policyholder. The older the policyholder is, the higher the probability of them dying within the policy term, and the higher the risk for the insurer. Therefore, the cost of Life Insurance increases with age.

Age is one of the key factors in calculating the cost of Life Insurance quotes. The older a person gets throughout the term of their Life Insurance contract, the more likely is it that there may be a claim. According to a survey by Forbes Advisor, the most common term period for those who currently have Life Insurance is up to 20 years (31%). Up to 10 years is the second most common term length (21%). Up to 30 years is the third most common (18%). The second least common is 30 years and the least common is a term of less then 10 years (6%).

By understanding how age affects the cost of Life Insurance, you can make informed decisions about your Life Insurance coverage and ensure that you are getting the best value for your money.

Health of the person insured

Health is another crucial factor that affect Life Insurance cost, as it indicates the current and future medical condition of the policyholder. The higher the risk of a claim, the higher the risk cost of Life Insurance premiums. The healthier the policyholder is, the lower the chance of them developing a serious illness or dying prematurely, and the lower the risk for the insurer. Therefore, the cost of Life Insurance decreases with better health. The insurer will usually require the policyholder to undergo a medical exam and answer a health questionnaire to determine their health status and medical history. Some of the health factors that affect Life Insurance cost are blood pressure, cholesterol, body mass index, family history.

Medical History

Your medical history can have a significant impact on Life Insurance cost. When you apply for a Life Insurance policy, the Life Insurance provider will usually want to do a detailed fact-find to see how much of a risk you might be to cover, They will ask you about your medical history, including any pre-existing medical conditions, hospitalisations, surgeries, and medications that you are taking. if you have a pre-existing medical condition, it may affect the cost of your Life Insurance. This is because certain health conditions increase the risk of premature death, making you a higher risk to insure. Additionally, if you have a history of mental health issues, such as depression or anxiety, it may also affect your Life Insurance costs leading to more expensive premiums. Not all pre-existing medical conditions will affect the cost of your Life Insurance premiums though. Life Insurance companies providers will consider each case on an individual basis and assess the risk accordingly.

A Life Insurance company will also consider an individual’s family medical history when assessing the risk of a person to be insured. If you have family history of heart disease, cancer, or other serious illness, it may indicate that they are more likely to develop that illness in the future. This can increase the likelihood of making a claim which increases the risk for an insurer. If the person to be insured is considered a higher risk, they may have to pay higher premium.

Weight (Body Mass Index)

Your weight (or body mass index, otherwise know as your BMI) plays a significant role in determining Life Insurance premiums. Your BMI is calculated using your weight and height. The formula is BMI = kg/m2 where kg is a person’s weight in kilograms and m2 is their height in metres squared. A BMI of below 18.5 is underweight; a BMI between 18.5 and 24.9 is considered normal weight; a BMI from 25 to 29.9 is considered overweight, and a BMI of over 30 is considered obese.

Obesity is associated with conditions like heart disease and diabetes which affect life expectancy.

Your BMI matters because Life Insurance companies closely monitor it because it relates to health and mortality. A high BMI indicates potential health risks which can push the cost of your Life Insurance higher.

If you have a high BMI, you can take control of it by exercising regularly, eating a balanced diet, and maintaining a healthy weight. These will positively influence your BMI helping to lower your profile which affects your Life Insurance cost.

Lifestyle Choices

Lifestyle choices are another factor that affect Life Insurance cost as they indicate the habits and behaviour of the policyholder that may affect their health and how long they will live. Lifestyle choices that will affect Life insurance cost are smoking, drinking, drug use, driving record, occupation, hobbies, and travel.

Smokers are at a higher risk of developing health issues such as cancer, heart disease, or stroke which can lead to dying prematurely. This is why smokers are considered a higher risk for Life Insurance providers, with their premiums typically being higher than those of non-smokers.

Another lifestyle choice that can affect Life Insurance cost is alcohol consumption. Regular, excessive drinking of alcohol can lead to health issues such as liver disease, which may increase Life Insurance premiums and in turn increase your Life Insurance cost.

If a policyholder engages in risky or unhealthy lifestyle choices, they will have a higher chance of dying or getting injured within the policy term, this being a higher risk for an insurer. Therefore, the cost of life insurance increases with riskier or unhealthier lifestyle choices.

If you’re looking to reduce the cost of your Life Insurance premiums, there are several steps that you can take. Quitting smoking is one of the most effective ways to reduce the cost of Life Insurance premiums. Life Insurance providers typically require you to be smoke-free for at least 12 months before they will consider you a non-smoker. Reducing your alcohol consumption and adopting a healthier lifestyle can also help to reduce Life Insurance cost.

Duration of the policy

The duration of the policy, or the term, is the length of time that the policy provides coverage for the person insured. The longer the term, the higher the cost of Life Insurance, as the insurer has to cover the insured person for a longer period of time and face a higher probability of paying a death benefit. For Term Life Insurance, the cost of Life Insurance is usually fixed for the entire term, unless the policyholder opts for a renewable or convertible option. The shorter the policy term, the lower the cost of Life Insurance premiums. If you outlive the policy term though, your coverage will expire, otherwise known as ‘lapse’, and you will need to purchase a new policy if you want to continue your coverage.

Premium payment method

The premium payment method is the way that the policyholder pays the cost of Life Insurance to the insurer. The policyholder can choose to pay the premium monthly, quarterly, semi-annually, or annually. The more frequently the policyholder pays the premium, the higher the Life Insurance cost, as the insurer may charge additional fees for processing and administration. The policyholder can also choose to pay the premium in a single lump sum, which may reduce the cost of Life Insurance, as the insurer does not have to worry about the risk of non-payment or the policy lapsing.

Insurer’s risk assessment

The insurer’s risk assessment is the process of evaluating the risk of the insured and determining the appropriate cost of Life Insurance. The insurer uses various methods and models to assess the risk, such as mortality tables, underwriting guidelines, and actuarial formulas. The insurer may also consider other factors, such as the location, occupation, lifestyle, hobbies, and family history of the insured, to adjust the cost of Life Insurance. The insurer’s risk assessment may vary from one insurer to another, depending on their experience, expertise, and profitability.


Hobbies can have an impact on your Life Insurance cost. For example, extreme sports such as skydiving, bungee jumping, and rock climbing are considered high-risk activities that can increase Life Insurance premiums. Similarly, hobbies that involve the use of motor vehicles, such as car racing or motorcycle racing can also increase Life Insurance costs.

An insurer may also consider the frequency and intensity of a hobby or activity, in addition to the safety measures taken by the person looking to be insured. Hobbies such as skydiving or motor racing can increase the cost of Life Insurance premiums. If someone is an occasional skydiver and follows all the required safety protocols, they may be considered a lower risk than someone who skydives frequently and takes unnecessary risks.

Of course, not all hobbies are considered high-risk by Life Insurance providers. Hobbies such as swimming, hiking, and cycling are generally considered low-risk activities that are unlikely to increase the cost of Life Insurance premiums.


The size of your family may affect the cost of Life Insurance. For example, if you have a big family, you may need more coverage to ensure your loved ones are financially secure in the event of your death. Additionally, you may be considered a higher risk and may have to pay more for coverage if you have a history of medical conditions in your family. If you are in good health and have a stable family history though, you may be able to secure a lower rate for your life insurance policy.

These are some of the main factors that affect Life Insurance cost. By understanding these factors, the policyholder can make informed decisions and find the best Life Insurance policy that suits their needs and budget.

Concluding, the cost of Life Insurance is determined by several factors, including the type and amount of coverage, age, health, gender, lifestyle choices, duration of the policy, premium payment method, and insurer’s risk assessment. The younger and healthier you are, the cheaper your Life Insurance premiums will be. The cost of Life Insurance for young adults, for example, will be more expensive if they smoke, have any pre-existing health conditions or other illnesses which can increase the probability of a them making a claim, leading to higher premiums.

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