Life Insurance Calculator UK

Life insurance costs depend on your age, health, smoker status and coverage amount. A 30-year-old non-smoker can get 25-year level term cover of £200,000 for around £8 per month. A smoker of the same age would pay approximately £16 per month. Premiums increase with age: a 45-year-old non-smoker would pay around £20–£25 per month for the same cover.

Level term life insurance pays out a fixed sum if you die during the policy term, so the payout stays the same whether you die in year 1 or year 25. Decreasing term insurance has a payout that reduces over time, typically aligned with a repayment mortgage. Decreasing term is cheaper because the insurer's risk decreases each year, but it may leave your family under-covered in later years.

Most UK life insurance policies pay out for any cause of death, including illness and accidents, provided you disclosed all material facts honestly at application. There is usually a suicide exclusion for the first 12 months. Pre-existing conditions must be declared; failure to do so could invalidate the policy. Terminal illness benefit is included with most policies.

Death-in-service benefit (typically 2–4x salary) is provided by your employer and ends when you leave that job. Life insurance is personal and stays with you regardless of employment. If you have a mortgage, dependants, or other financial obligations that exceed your death-in-service cover, additional life insurance is advisable.

Life insurance payouts are generally tax-free if the policy is written in trust. If not in trust, the payout forms part of your estate and may be subject to inheritance tax at 40% above the £325,000 nil-rate band. Writing your policy in trust is free and ensures the payout goes directly to your beneficiaries without probate.

A common rule of thumb is 10 times your annual salary, but your actual needs depend on your mortgage balance, number of dependants, outstanding debts, and desired standard of living for your family. For a family with a £250,000 mortgage and £40,000 income, cover of £600,000–£650,000 would be reasonable.