Life insurance premiums explained
Your life insurance premium is the payment you make to keep your cover in place, but not all premiums work the same way. This guide walks through the main types of premium, how each one behaves, and the factors insurers consider when setting your price.
Richard Eagling is the Senior Editor at myTribe, with 25+ years in personal finance journalism and a CII Certificate in Financial Services. Previously at Moneyfacts and NerdWallet UK, his work has featured in The Guardian, BBC and The Telegraph.
Full BioLife insurance premiums
- Life insurance premiums are the payments you make to an insurance company for your policy.
- Most people pay their premiums monthly, but providers will often let you pay yearly or quarterly, too.
- Premiums come in three main types: guaranteed (level) stays the same for the life of the policy, reviewable is reassessed every few years and can rise, and age-related (increasing) goes up at set points as you get older.
- The main factors that set your price are your risk (age, health, family medical history, lifestyle and occupation), how much cover you want, and the type and term of policy.
- Add-ons such as critical illness cover or waiver of premium will increase your premium.
- Smokers normally pay more for life insurance premiums, but insurers cannot use your sex as a factor to determine the price.
A life insurance policy pays out a sum of money to someone you nominate (the beneficiary) if you die while the policy is active. The money you pay to the life insurance company is called the life insurance premium.
To decide how much the premium will be, the insurance company considers lots of different factors – like your age, health, lifestyle and job. It also depends on the type of insurance you choose and the amount of the potential payout.
How do you pay your premiums?
Normally, you pay your premiums every month by direct debit, though sometimes it can be quarterly or yearly.
If you have a term insurance policy, the term is set at the start of the policy. You’ll pay the premiums until the end of the term or until you die, whichever happens first. If you have a whole of life policy, you pay premiums until you die and the policy pays out then. You can choose to stop paying premiums at any time, but that would mean that your policy stops and your loved ones wouldn’t get a payout.
The costs of the premium can be very different for term life insurance and whole of life. Our pricing research showed that in 2026, the average premium for term insurance is £20.82 a month based on a cover amount of £150,000. This shoots up to £102 a month for whole of life insurance.
To get a life insurance quote for the leading UK providers based on your own situation please complete our form.
Usually the person who’s being insured pays their own life insurance premium. You can’t normally pay for someone else’s.
One exception is death in service benefit, which an employer might offer to its employees. The employer pays the premiums and its insurer would pay any payout to your nominated beneficiary.
UK insurance law means you can only insure someone if you have what’s called an insurable interest in them. This means that you’d be worse off financially if they died. So, for example, someone might choose to take out life insurance on their ex-partner if they have children together.
What happens if you stop paying your premiums?
If you miss a life insurance payment, the cover doesn’t tend to stop immediately. Most providers give you what’s called a grace period of around 30-60 days. During this time, you can make the missing payments without the cover lapsing. If you don’t get up to date within the grace period, the cover will then stop.
If you’re not sure what grace period your provider offers, check your paperwork or ask them.
It’s worth speaking to your insurer if you know you’re going to struggle to pay. You might be able to do something like reduce your payments or change the date they come out of your account.
To see which type of life insurance premium is best for your situation please request a comparison quote here.
Future-proof your policy with indexation
Some policies will let you add something called indexation to your policy. This basically means that you can increase the payout amount (also called the sum assured or cover) to help it keep pace with inflation.
If you’ve added an indexation option, the insurer will usually contact you at certain times to ask if you’d like to increase your cover amount. If you choose to do this, your premiums will also increase, even if you have a guaranteed premium policy.
There are lots of things that insurers will take into account when they’re working out how much your premium should cost.
They’ll consider:
- Your risk: Life insurance companies use a process called underwriting to assess how likely it is that they’ll need to make a payout on your policy. And the higher the risk, the higher the premium. Things like your health, family medical history, your age and your BMI all have an impact on your premium. Lifestyle habits, like smoking, alcohol and illegal drugs consumption, also come into play. You’ll be asked about your occupation and hobbies, too, to see if your job or your pastimes put you at higher risk.
- Cover amount, type and term: The premium will also be affected by how much cover you want. As a general rule of thumb, the higher your cover, the higher your premium cost will be. The type of cover you choose and the length of the term will also affect your premiums.
- Any add-ons: If you want to include add-ons like critical illness or waiver of premium, your premiums might be higher. Critical illness pays out a tax-free lump sum if you’re diagnosed with a serious illness during the term of your cover, if that illness is specified on the policy. People often take it out at the same time as life insurance. And waiver of premium means your premiums are paid if you can’t work due to serious ill-health or injury.
One thing that doesn’t affect your premium is your sex. Under the 2012 EU Gender Directive ruling, insurers can’t use different pricing for men and women.
To discover how much your life insurance will cost you, please request a personalised comparison quote.
People often worry that their life insurance premiums will keep going up. But whether they will or not depends on the type of policy you choose.
With a guaranteed premium life insurance policy, your payments are set and don’t change. So if you choose a guaranteed policy, whether that’s a term or whole of life policy, your premiums are fixed and won’t go up or down no matter what.
If you have a reviewable policy, the insurer will review your premiums at set times to see if you’re now higher risk. The premiums could be cheaper than a guaranteed policy when you first take the policy out. But the cost will rise and could end up being more expensive.
Can you protect your premiums?
Yes, you can protect your life insurance premiums. A waiver of premium (sometimes called a waiver of premium rider) is an extra benefit that you can choose to add to your life insurance policy for an additional cost. If you fall seriously ill or are injured and can’t work for a long period of time, you can claim on your waiver of premium. If your claim is successful, your life insurance premium payments will then be covered until you return to work.
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Disclaimer: This information is general, and what is best for you will depend on your personal circumstances. Please speak with a financial adviser or do your own research before making a decision. Not all of our insurer broker partners offer an advised service. The brokers we work with provide a comparison service from a panel of some of the UK’s top insurers, such as Aviva, L&G, LV and Zurich. Not every broker works with all the insurers listed in our guides.
Frequently Asked Questions
What's the difference between guaranteed and reviewable premiums?
Guaranteed premiums mean just that – they’re guaranteed to stay the same until the end of the policy. They won’t change.
If you have a reviewable premium policy, the insurer will review your premium from time to time. They might take into account lots of different things, like your age, general economic factors and your health. Your premiums will go up over time.
Do life insurance premiums go up with age?
This depends. If you have a guaranteed premium life insurance policy, your premiums never go up. But if you have a reviewable policy, your premiums will go up as you get older, purely because the older you are, the more risk there is of you dying.
Do smokers pay higher premiums?
Yes, if you’re a smoker your premiums will normally be higher, even if you only smoke occasionally. When insurers talk about smoking, they normally mean all types of tobacco products, including cigarettes, cigars, vapes and nicotine replacement products like patches and chewing gum.
If you stop smoking after taking out a policy as a smoker, it might be worth looking into changing your insurance policy as you could get cheaper premiums. Just bear in mind that your premium could cost more as you’ll be older, and any new medical conditions will also be taken into account. So be careful not to cancel your current policy before you have a new one set up.
Will my medical history affect my premium?
Yes, it can. If you have certain medical conditions like your premium is likely to be higher. For example, if you have type 1 diabetes, a high BMI or have had cancer in the past, you’ll probably need to pay more.
Most insurance companies will ask you about your current and past health. They’ll often also want to know about the medical history of your close family members. It’s crucial to be honest about any medical conditions you have, or have had in the past. If you don’t, it could mean the insurer won’t pay out.
Do I get my premiums back at the end of the policy?
No. Normally, when the policy term ends and you haven’t made a claim, you don’t get any life insurance premiums back. If you cancel your policy, you won’t be refunded your premiums either, unless you cancel within the 30-day cooling off period. In that case, you’d generally get a full refund.
Is it cheaper to pay monthly or annually?
It can be a little cheaper to pay your premium yearly rather than monthly. Insurers often add a small extra amount if you pay monthly to cover administration costs.But most people pay monthly because it's easier to spread the payments over time.