Life insurance premiums explained
Life insurance premiums vary from one insurance provider to another and one person to another. This guide explains what a premium is, what may affect the cost and the choices that can influence the amount you pay.
What are life insurance premiums?
A life insurance premium is the amount you pay for your policy. Payments are usually made monthly or annually, depending on the insurer and policy.
You’ll need to keep paying the premium to keep your policy active. If you stop paying your premiums, it usually means your cover will stop. This means no benefit would be payable for an event occurring after the cover has ended.
The cost of your premium is influenced by several factors, including your age, health, lifestyle and the amount of cover you choose.
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This guide contains general information about the insurance market and related topics. Some content may not reflect Vitality’s specific products, features, or processes. |
How are life insurance premiums calculated?
Each life insurer has their own way of calculating your life insurance premium. That’s why when you get quotes from different companies, they will be different amounts. The life insurance company is assessing the risk of you dying while the policy is in place and they use a range of factors to do this, based on their underwriting criteria.
The cost of your cover will depend on your answers to these questions and the type of policy you choose.
Personal factors that affect your premium
Personal factors are your individual characteristics such as:
- Age – the older you are the more likely you are to make a claim.
- Health – if you have a current medical condition this can influence the price of cover.
- Medical history – your family history and past medical history will also be assessed.
- Lifestyle – such as how much alcohol you drink and what your hobbies are.
- Smoker status – a major factor in assessing your future health.
- Occupation – you may need to pay more if you have a high risk occupation.
The insurer uses this information to assess the risk of a claim being made. The higher the risk, the higher the premium. So, a 50 year old male smoker with high blood pressure will likely pay more for cover than a 25 year old who doesn't smoke and has no medical conditions.
Policy factors that affect cost
The options you choose when you set up your policy also affect the price.
Your cover level
The amount of cover selected will affect the premium. For example, if you take out enough insurance to cover a large debt, such as a mortgage, you may need a larger payout if you die. Therefore, your premiums are likely to be high. But if you’d paid your mortgage off, and only needed a smaller payout, this would make your premiums lower.
The policy term
This is how long the policy lasts. Short term policies can be less expensive than policies that last for decades. A long-term policy means there’s a greater chance of making a claim, so this is taken into account. Term life insurance with Vitality ranges from 5 to 70 years, depending on the policy.
Additional extras
Many insurers, like Vitality, allow you to add extra cover to your life insurance policy. Each of these additional covers will add a bit more to the price of your premium.
They’re designed to insure you against other risks, such as:
- Serious Illness Cover – may pay a lump sum if the insured person meets the policy definition for a covered condition.
- Income Protection insurance – may pay a monthly benefit if the insured person meets the policy’s incapacity definition and other claim conditions.
- Accident and Fracture Cover – may pay a lump sum for specified injuries or events that meet the policy terms.
Type of cover – term vs whole of life insurance
The type of insurance you buy will also have an impact on the price you pay. There are two main types of life insurance, term and whole of life cover.
Term insurance pays out if you die while the policy is in place. So, if you take out term insurance for 20 years to cover your mortgage and die 10 years later, your insurance will pay out. If you die 25 years later, it wouldn't, as the policy will have ended by then.
Whole-of-life insurance is designed to remain in place for life, subject to the policy terms and required premiums being maintained. A qualifying claim may result in a benefit being paid to the appropriate beneficiary or beneficiaries.
With whole of life cover, the insurer knows at some point that they will need to pay out. Whereas with term life insurance, they may never need to make a payment. So, it tends to be cheaper.
What is the difference between guaranteed and reviewable premiums?
Most standard term life insurance policies will offer one set premium price for the duration of the policy. This is known as a guaranteed premium. Other types of life insurance, such as whole of life insurance, or Serious Illness Cover may offer premiums that can change over time. These are reviewable premiums.
Guaranteed premiums
A guaranteed premium is intended to remain unchanged for the stated policy term, provided the policy terms are met. So, if you’re quoted £40 a month for a level term insurance policy for 25 years, that amount typically won’t change during that time.
Although a guaranteed premium life insurance policy may cost more than a reviewable policy to begin with, you’ll know exactly how much it’s going to be each month, making it easier to budget.
Reviewable premiums
With a reviewable premium, the amount payable may change at specified review dates. The timing and basis of each review depend on the policy. Check the policy documents to understand the factors that may be considered and the options available if the premium changes.
They look at your age and how other people’s claims are affecting costs. Plus, whether factors like people living longer have changed their pricing model. Your personal health changes are not a factor when assessing your new premium price.
Here’s how they compare.
| Feature | Guaranteed Premium | Reviewable Premium |
|---|---|---|
| Premium | Stays the same throughout the term. | Can increase at review dates, usually every 3-5 years. |
| Initial cost | Often slightly higher. | Usually lower to begin with. |
| Price certainty | High. Will not change over time. | Low. May rise over time. |
| Pros | Easy to budget, no price increase surprises | Starts cheaper, affordable entry point |
| Cons | Higher starting cost | Uncertainty over long-term cost |
Do life insurance premiums increase every year?
If you have a policy that has guaranteed premiums then they typically won't increase each year. Once the policy is set up, your premiums will stay the same until the policy ends. Getting older or having a medical condition won't affect the cost of cover, until you take out a new policy.
It’s only reviewable premiums that may change. And even then, they may not change every year. When an insurer reviews a policy, they will let you know the new cost of your policy, and you can decide if you want to accept it or not.
How do I lower my premiums?
There are ways you may be able to lower the cost of your cover.
Check your level of cover
Review the amount of cover against your current needs and other financial provisions. Reducing cover may lower the premium, but it will also reduce the financial protection available. Consider seeking advice if you are unsure.
And if you have a repayment mortgage, you can take out a policy where the payout reduces as you pay back the mortgage. This can work out cheaper than a level term insurance policy for the duration of your mortgage.
Review your additional cover
It’s also possible to lower your premiums by prioritising what you take out as additional cover. You may decide you don't need both Serious Illness Cover and Income Protection. Alternatively, when you bundle products together you may be able to get a better price from one insurer rather than pay for three separate policies from different insurers.
Reduce the term of policy
A shorter term may cost less, but the cover will end sooner. Check that the selected term remains appropriate for the need you want to protect.
Look after your health
Insurers will ask you about your weight, medical background and smoker status. So, giving up smoking, and having a healthy weight can go a long way to lowering premiums. At Vitality, we offer premiums up to 40% lower than our standard life insurance premiums to people who stay healthy and active.
Can someone else pay your life insurance premiums?
Usually, you’ll pay your own life insurance premiums. But someone else can pay the premiums as long as the person named on the policy consents to the life insurance and the person paying the premium can prove that they will suffer financially if you die. For example, an ex-partner, or a business partner.
A business partner would stand to lose money if you died. And an ex-partner may rely on you for child support. They may take out an insurance policy that they pay for in case something happens to you. This is called an ‘insurable interest’. This means that the policyholder would lose out financially if you died.
You may also have a death in service benefit with your employment. In this instance your employer pays the premium. But if you died, the company’s insurer pays out to your family or named beneficiary.
How long do you pay life insurance premiums for?
With term life insurance, you pay your premiums until the policy ends. So, if you have a policy that lasts 20 years, your premiums will be paid for 20 years.
With whole of life cover, premium payments continue until death, unless the policy says otherwise. Some policies will stop payments after a certain age although the policy stays in place until you die.
If you choose to stop making payments yourself, the policy will usually come to an end, and you will no longer be covered.
Some policies offer a ‘waiver of premium’ as an optional benefit. It may cover required premiums if the insured person meets the policy definition and claim conditions following illness or injury.
What happens if I stop paying my premiums?
Your cover will usually end if premiums are not paid. Unless you have waiver of premium in place and have stopped your payments due to illness or injury. A life insurance policy also has no cash-in value. You won’t receive anything back if you stop paying your premiums.
If cover ends, a new application may be required. So, you’ll have to answer the health and lifestyle questions again. You could find that your cover is more expensive because you’re older or you have poorer health.
What is the minimum premium I can pay?
Term life insurance premiums start at £5 per month with Vitality, but this depends on age, health and chosen cover. The minimum monthly premium for Vitality Plus is £45 and £60 for joint life plans. With Vitality Plus, you can take advantage of Optimiser which can help keep your premiums low.
Key takeaways
- A life insurance premium is the amount you pay for your life insurance policy.
- The cost of your premium is influenced by several factors, including your age, health, lifestyle and the amount of cover you choose.
- With term life insurance, you pay your premiums until the policy ends. With whole of life cover, premium payments continue until death, unless the policy says otherwise.
- If you choose to stop making payments yourself, the policy will usually come to an end, and you will no longer be covered.
Vitality life insurance
Want to know more about life insurance or thinking about taking out a policy? Here are some of the benefits of taking out life insurance with Vitality:
- A brand you can trust - In 2024, we paid out 98.9% of all Life Cover claims.*
- Get a lower monthly premium upfront when you add Optimiser to your plan. Keep your premiums low when you stay active.
- Access to Vitality partner discounts and rewards.
- Get free no-obligation advice. Our advisers offer expert advice to help you make the right decisions.
You're not alone in choosing Vitality. Over 2 million lives in the UK are now covered by our insurance, and we’re here to support you too.
Ready to take the next step? Getting a quote is simple and takes just a few minutes.
*VitalityLife Claims and Shared Value Report 2025
