10 min Read
06 Nov 2016

How much does £100,000 life insurance cost?

how much does £100,000 life insurance costHow much does £100,000 of life insurance cost?

The most popular question I am asked in relation to life insurance is 'How much does £100k of life insurance cost?' In this article I will compare life insurance quotes but also explain what you need to think about when searching for the best life insurance policy. I will also tell the best place to compare life insurance quotes online from a range of insurance companies.

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 different types of life insurance explained

The different types of life insurance are:

  • Level term assurance - where you pay a set premium (usually guaranteed) from 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 policy is often used to cover an interest-only mortgage or to simply provide a lump sum upon death of the life assured to support their family or loved.
  • Decreasing term assurance or Mortgage life insurance - this works in the same way as level term assurance apart from the fact that the level of cover (the sum assured) decreases over the term of the policy. 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 will payout 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 with which they'd then need to use to generate an income. It is often used where the sum assured might be payable into trust for children.

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, or 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?
  • the level of income or capital lump sum your family or dependents would need in the event of your death

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

Most insurance companies accept applicants at ordinary rates i.e they are charged the premium originally provided on the life insurance quote. 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.

Below I have produced a table which shows the monthly premiums for £100,000 of life insurance over 20 and 30 years 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 this life insurance specialist, whose service I've vetted. You will be surprised how little it costs you.

 

£100,000 Life insurance cost for non-smokers

Age 20 year Level term assurance 30 year Level term assurance Mortgage Life Insurance (30 years) Whole of Life Assurance
30 £5.08 £5.83 £4.62 £34.25
35 £6.85 £8.10 £6.12 £41.24
40 £9.39 £11.58 £8.68 £48.27
45 £13.58 £18.29 £12.65 £61.28
50 £20.87 £30.20 £20.67 £82.10

£100,000 Life insurance cost for smokers

 

Age 20 year Level term assurance 30 year Level term assurance Mortgage Life Insurance (30 years) Whole of Life Assurance
30 £7.21 £8.96 £6.39 £47.11
35 £11.20 £14.34 £9.47 £59.28
40 £16.77 £21.76 £16.52 £76.59
45 £26.78 £36.73 £25.93 £100.13
50 £43.03 £63.10 £44.77 £130.45

all figures quoted are monthly premiums

The best life insurance quote for you

Having searched the market I have identified the best life insurance comparison site for getting the best and cheapest life insurance quotes online.

I’ve personally vetted their service, which is excellent, and their knowledge will help you choose the best life insurance policy and level of cover for you.

Get an instant life insurance quote

Get an instant life insurance quote in seconds, comparing the whole market

Find the best value life insurance policy

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.

Other points to consider when you get a life insurance quote:

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. 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.

Your health

If you have any health issues it is worth talking to the aforementioned life insurance specialist once you’ve got a quote from them. That is because some insurance companies will be more lenient than others when it comes to underwriting certain health issues. All life insurance quotes, irrespective of which 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 can pay to chat to a specialist before you apply who can advise you which life insurance company will provide the best and cheapest life insurance policy for you.

Critical illness cover

Life insurance only pays out on 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 does include many forms of cancer.

Article overview

Key points

  • The different types of life insurance
    • Level term assurance
    • Decreasing term assurance or Mortgage life insurance
    • Whole of life insurance policy
    • Family Income Benefit
  • What affects the cost of life insurance?
    • 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
  • Having searched the market I have identified the best life insurance comparison site for getting the best and cheapest life insurance quotes online.

Written by Damien

Damien is one of the most widely quoted money and investment experts in the national press and has made numerous radio & TV appearances. He created MoneytotheMasses.com while working in the City when he became disillusioned with the way the public were left to fend for themselves because they could not afford financial advice.

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