How much does £100,000 life insurance cost? Choose the best life insurance

What is life insurance?

It is important to take a quick step back and look at what life insurance is, the types of life policies available and how much life insurance you actually need. £100k of life insurance may actually be too much or too little for your needs.

Life insurance is a policy where in exchange for monthly or annual premiums a life insurance company will agree to pay out a sum of money (i.e. £100,000) should you die within the policy term (the time period you have chosen to take the policy over).

The different types of life insurance explained

The different types of life insurance are:

• Level term assurance – where you pay a set premium from the outset – it is guaranteed not to change during the term which you can choose. You may opt to be covered for £100,000  of the policyfrom the outset for a set term, say 20 years. If you die within that term the life insurance company will pay out the agreed lump sum (i.e £100,000). This type of cover is often used to cover an interest-only mortgage or to simply provide a lump sum upon the death of the life assured to support their family.
• Decreasing term assurance or Mortgage life insurance – the cover amount does not remain level and instead this type of life insurance provides a decreasing cover. Because the level of life insurance decreases over time the premiums are cheaper than a level term assurance policy. A mortgage life insurance policy is often used to cover a repayment mortgage where the policy sum assured falls in line with the reducing mortgage, as it is paid off.
• Whole of life insurance policy – this type of life insurance has no end term. So it pays out a lump sum based on the amount of cover whenever you die. Consequently, the premiums on a whole of life insurance policy are much higher than those of a mortgage life insurance contract or a simple level term assurance policy. A whole of life policy is often taken out where there is a fixed need for a lump sum in the event of the life assured's death i.e to pay an inheritance tax (IHT) liability.
• Family Income Benefit – this works in the same way as a level term assurance policy but rather than pay out a tax-free lump sum it pays out a regular income stream instead. This is popular where the policyholder does not want the beneficiary or recipient to receive a lump sum which they'd then need to use to generate an income. It is often used where the sum assured might be payable into a trust for children.
• Over 50s life insurance – Over 50s life insurance is a type of life insurance policy designed for people aged 50 and over. Premiums are paid monthly or annually and so long as premiums are kept up to date, the policy is guaranteed to pay out should you die. A key feature of an over 50s life insurance policy is that it is not underwritten. This means that you do not have to answer any medical questions and are guaranteed to be accepted regardless of your medical history.

What affects the cost of life insurance?

Among the factors affecting the cost of life insurance are:

• the level of life insurance cover you need
• the type of life insurance
• the term of the policy
• your age (but not your gender)
• your health
• your lifestyle (including activities such as dangerous sports)
• whether you smoke or not

The cost of your life insurance will firstly be calculated using your age; whether you smoke or not; the amount the policy will pay out and how long you are covered – these factors will give you a quotation for life insurance. Once you are happy with the quotation, you will apply to the insurance company providing your health, occupational and lifestyle information.

If the insurer looks at your personal information and decides you pose no extra risk for a claim than other people of your age and smoker status, you will be offered the life insurance cover at the quoted price. However, if you have health issues (such as high blood pressure, diabetes etc), smoke or take part in hazardous lifestyle pursuits then your premiums will be slightly higher (the official term used is either ‘loaded' or ‘rated') to reflect your increased risk to the insurance company.

How much is the average life insurance?

The average life insurance costs around £15 per month but life insurance premiums start at as little as £4 per month while the average cost of life insurance with critical illness insurance will cost more.

The cost of an average life insurance policy will depend on your age and health too so the average price applies to someone around 35 years of age and in reasonably good health.

What is the average life insurance cost per month?

The average monthly cost for life insurance will vary depending on your personal circumstances and how much life insurance you wish to buy.

Below I have produced a table which shows the monthly premiums for £100,000 of life insurance over a 20-year term and a 30-year term for Level term assurance. I also compare the cost of £100,0000 of Mortgage life insurance as well as £100,000 of Whole of Life insurance. The table is also split between smokers and non-smokers to show the difference.

However, I suggest that you get a quote for cheap life insurance from LifeSearch*, a life insurance specialist, whose service I've vetted. You will be surprised how little it costs you, plus, if you take out a policy, you will qualify for up to £100 cashback.

£100,000 Life insurance cost for non-smokers

Age	20 year Level term assurance	30 year Level term assurance	Mortgage Decreasing Life Insurance (30 years)	Whole of Life Assurance
30	£4.14	£4.85	£3.62	£51.77
35	£5.14	£6.55	£5.13	£69.38
40	£7.30	£9.98	£6.57	£81.96
45	£11.32	£15.98	£10.28	£96.55
50	£16.77	£26.34	£16.62	£110.70

all figures quoted are monthly premiums and prices are correct as of January 2024

£100,000 Life insurance cost for smokers

Age	20 year Level term assurance	30 year Level term assurance	Mortgage Decreasing Life Insurance (30 years)	Whole of Life Assurance
30	£6.34	£8.60	£6.11	£68.29
35	£9.30	£13.25	£8.65	£87.96
40	£15.70	£22.36	£14.27	£109.78
45	£25.70	£35.71	£23.67	£129.68
50	£41.79	£58.10	£37.58	£148.90

all figures quoted are monthly premiums and prices are correct as of January 2024

The best life insurance quote for you

Getting the cheapest life insurance quote is just the first step in the process when it comes to buying the best and cheapest life insurance policy. After completing an application it will be assessed by the insurance company based on a number of factors including health, family history, dangerous jobs and pastimes. This is a process known as underwriting and, depending on the answers you give, your premiums could be increased (often referred to as a rating or loading).

It is tricky to know which insurance company is best to apply through, as it isn't always the case that the cheapest quote ends up being the cheapest policy. We would therefore always recommend that you speak to a life insurance specialist, such as LifeSearch* as they have the knowledge and expertise to ensure that the policy you choose is the best and cheapest for your personal circumstances offering you peace of mind.

Comparison sites and online life insurance calculators can provide guidance, but they are unable to go into the detail that is necessary to provide an accurate and relevant quote. Particularly if your health, job or lifestyle puts you in a high risk group, specialist life insurance advisers have the knowledge to select the insurance company that is likely to charge you the least while offering you comprehensive cover. Using an independent specialist will also mean that they can help with the application process, chase the insurance company on your behalf and even help to put your policy into trust (meaning the policy would pay out quickly and ensure that your beneficiaries do not have to pay inheritance tax).

When speaking to the aforementioned life insurance specialist there will be no obligation to take things further, simply complete the form either via the above link or the quotation request box below. Just fill in your details and they will call you straight back. If you decide to take out a policy then you will qualify for up to £100 cashback. The firm employs strong ethics and will only ever offer a policy if it is the best policy to suit your personal needs. If they are unable to offer a suitable policy or alternatively, are unable to save you money on your existing policy, they will happily recommend that you stick with what you have.

They compare life insurance policies from the biggest insurance companies and you can get quotes on Level term assurance, Mortgage Life Insurance, or Family Income Benefit.

How much life insurance do you need?

The amount of life cover you need depends on your personal circumstances. However when deciding your level of cover, consider:

• how will your mortgage, other debts or funeral expenses be paid in the event of your death?
• will there be a potential Inheritance Tax (IHT) bill payable on your estate after you die?
• the level of income or capital lump sum your family or dependents would need to support their living costs in the event of your death

You can follow our step-by-step guide that helps you calculate  “How much life insurance do you need?“.

Other points to consider when you get a life insurance quote

Life insurance can seem simple to buy and if you're searching on the internet, you will find that the quotes you find will only cover death. As we've pointed out earlier in the article, the price that you are quoted will usually change once you complete the full application process which will include a lengthy form completion and may also require a medical examination or basic health screening. Understanding some of the following factors that affect the cost of your life insurance will mean you're more prepared for what to expect.

Joint life insurance or single life insurance – which is cheaper?

When you take out a joint life insurance policy this will provide a lump sum, usually when the first person covered dies (this is called joint life first death life insurance). While this may be ideal if, for example, you plan to use the sum assured to pay off your mortgage it does mean that the life insurance contract ends upon payment. The survivor will no longer have life insurance cover should they subsequently die and if they were to be a lone parent, may feel vulnerable without it. If they were to arrange a new life insurance policy it will likely be more expensive as they are now older and may have new health issues.

Interestingly two single life insurance policies can sometimes be cheaper than a joint life policy because there is nothing stopping either party going to different insurance companies to find the cheapest insurance quote.

How health affects how much your life insurance costs

If you have any health issues it is worth mentioning that to our recommended life insurance specialist*. As we've mentioned above, some insurance companies will be more lenient than others when it comes to underwriting certain health issues and medical conditions. All life insurance quotes, irrespective of which online comparison tool you use, always assume you have no health issues. It is only once you have successfully applied for a policy that you will know the final premium. That is why it pays to chat with a specialist before you apply as they can advise you which life insurance company will provide the best and cheapest life insurance policy for you.

Adding critical illness insurance to your life insurance

Life insurance only pays out on the death of the life assured. However, how would your family cope if you were to suffer a heart attack? While you may well survive what would happen if you were unable to work? How would you pay your mortgage? Critical illness cover can be added to a life insurance policy, for an additional cost, so that the policy will pay out in the event of you being diagnosed with one of a number of conditions that meet the insurance company's definition of critical. This includes many forms of cancer as well as heart attacks and strokes. The key point to remember with critical illness insurance is that it pays out upon diagnosis, even if you go on to make a full recovery. Check out our article Critical Illness insurance – what is it and is it worth having?

 

If a link has an * beside it this means that it is an affiliated link. If you go via the link, Money to the Masses may receive a small fee which helps keep Money to the Masses free to use. The following link can be used if you do not wish to help Money to the Masses and do not wish to qualify for the cashback referred to in the article – LifeSearch