When you buy life insurance, the kind of coverage that pays a lump sum of money if you die, you’re making what will (hopefully) be a fairly long-term financial commitment. For that reason, it’s very important to consider how much it will cost, and whether you’ll always be able to afford those ongoing monthly payments.
The tricky part is that the cost of life insurance varies widely, so figuring out if it’s affordable for you may require a little more research. one thing is for sure: the price goes up with age. But there are many other factors that can affect how much life insurance will cost you personally, and it’s hard to say life insurance will cost “that much” without taking those things into account.
Reading: How much cost life insurance
what affects the cost of life insurance?
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When you buy a life insurance policy, the insurer will consider a number of factors related to you and your lifestyle when deciding what your premiums will be, that is, the amount you pay each month to be insured. this includes:
- your age
- your personal and family health history
- your lifestyle (for example, alcohol consumption and whether you have a dangerous job or hobbies)
- your smoking status
- the amount (how much life insurance coverage you are buying)
- the type (whether you buy tapered or level coverage, for example)
- the duration (how long your policy will last)
- how much coverage you really needmaking sure you’ve factored in things like your partner’s future income or the age at which your children will be financially independent, it may mean you need less insurance coverage. what I initially thought.
- how long you really need coveragemany people purchase coverage until their partner retires, but your partner may be able to support themselves financially before then, thus reducing the amount of time you really need to be covered. Likewise, there are other natural points where your household expenses can be significantly reduced, such as a mortgage payment or the financial independence of a child. Factoring in your future needs in this way could reduce the term of the policy you need, and therefore the monthly price you’ll pay to be covered now.
- what kind of life insurance coverage you really needwhen people think of life insurance, they often think they would pay the same amount if they died now or in the future. this is what is known as “tier coverage”, in which the amount paid always remains the same. but does everyone really need level coverage? We often find that people’s financial responsibilities and vulnerabilities reduce as they get older, usually due to things like paying mortgages or children’s ability to support themselves. Young adults tend to have the greatest need for financial protection, because they have a large outstanding balance on a mortgage, or they have many years left where they want to be able to support their family, but fast-forward 10, 20, or 30 years, and it’s likely that need for protection has been reduced. With this in mind, it could be that ‘degressive coverage’, which gradually pays less over the term of your policy, is an option. the family income benefit could be another alternative. both would be cheaper per month than level coverage, while still being perfectly adequate for your needs.
- a healthy, non-smoking office worker, male or female
- £300,000 of 25-year uniform life insurance cover
- cited on 04/14/2020
Of course, factors related to the real life insurance coverage you’re purchasing will also contribute to its cost:
When is the best time to take out life insurance?
Generally speaking, life insurance will be cheaper if you’re young and healthy. premiums will increase with each passing birthday, if you develop a health condition, for example, or take up a risky hobby.
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You should always be totally honest about your health and lifestyle when applying for life insurance. The most common reason a claim is not accepted later is what is known as “misrepresentation”, that is, not being completely accurate and honest during the application process. To make sure your life insurance pays when you need it, honesty really is the best policy.
how to minimize the cost of life insurance for you
As mentioned, the price of life insurance increases with age, something you can’t control. however, there are other things you can consider to keep the cost of life insurance low for you personally, relative to your age. these include:
price of life insurance for 25, 35 and 45 years
As we mentioned, many factors determine the price of life insurance. To give you an idea, here’s what the monthly premiums would be for a fairly typical life insurance amount and policy length, based on:
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