How where you live affects life insurance cost

May 9, 2022

In addition to obvious factors such as your lifestyle, health and age affecting the cost of life insurance, where you live can also affect how much you pay on premiums.

So how much is life insurance UK and how much more might you have to pay simply because you live in a certain location?

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Read on to find out…

What is the monthly average life insurance cost UK?

How does my location affect life insurance premiums?

How is a ‘deprived area’ determined for life insurance?

What UK areas are the most deprived?

How do I check if my postcode is in an expensive life insurance area?

Who are the best life insurance providers UK?

What is the monthly average life insurance cost UK?

The average life insurance cost per month UK can vary anywhere from £15.85 to £30.40 and can typically cost an average of £25 per month.

The monthly cost of your life insurance is determined by:

  • the type of life cover (e.g. term, decreasing term or whole life)
  • a policy’s term (number of years you want the policy to cover)
  • the amount of cover (e.g. what you want your policy to pay out should you die during its term such as £100k or £200k)
  • and your personal circumstances (e.g. your age, medical history, smoking status, hobbies and location).

For example, the average monthly cost for level term life insurance at the age of 30 starts from £5.83. But, if you take the same type of insurance out at the age of 50, then the premiums can shoot up to as much as £30.20 per month. However, this is still much cheaper than many monthly TV subscription services!

And if you have a penchant for extreme sports such as base jumping or cave diving, smoke heavily or have a serious health condition like heart disease, then you can expect to pay A LOT more than average.

In fact, certain lifestyle choices or medical issues can mean insurers will see you as an ‘uninsurable risk’ meaning you won’t be able to insure your life at all.

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How does my location affect life insurance premiums?

Life insurance cost is calculated according to the risk of you making a claim and one of the many underwriting factors life insurance companies assess the risk of and use to calculate your premiums is where you live.

If you happen to live in a lower life expectancy area where data shows many people living in the same local authority or postcode tend to die at a younger age than average, then this will increase your insurance premiums.

Conversely, if you live in an area where life expectancy is above average, then you can expect to get cheaper premiums.

Data from the Office of National Statistics (ONS) show there is a direct correlation between life expectancy and the area in which you live.

For example, men born in the most deprived areas of the UK can expect to die around 10 years younger than men living in the most affluent areas.

Likewise, women residing in poverty-stricken areas can expect to die 8 years younger than women living in wealthier locations

Similarly, ONS data shows that your overall health is affected by where you live too.

For example, males residing in the poorest parts of the UKwere expected to live less than three-quarters of their lives in good general health.”

Likewise, females living in the most impoverished UK locationswere expected to live less than two-thirds of their lives in good general health."

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How is a ‘deprived area’ determined for life insurance?

According to The English Indices of Deprivation 2019  (IoD2019), a statistical release issued by the Ministry of Housing, Communities & Local Government (MHCLG), there are several deprivation factors that can statistically make an area considered ‘deprived’ as follows:

  1. Income (22.5%)
  2. Employment (22.5%)
  3. Education (13.5%)
  4. Health (13.5%)
  5. Crime (9.3%)
  6. Barriers to housing and services (9.3%)
  7. Living environment (9.3%)

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life insurance costs living in deprived areas

Is there a difference between poverty and deprivation?

Yes, there is a slight difference. The IoD2019 technical report5 clarifies this difference as:

“People may be considered to be living in poverty if they lack the financial resources to meet their needs, whereas people can be regarded as deprived if they lack any kind of resources, not just income.

So it’s not just what people earn that determines whether an area is deprived.

What UK areas are the most deprived?

Top 10 most deprived local authority areas in the UK

No Local Authority Area
Based on Rank Based on Score Based on LSOAs in top 10% most deprived areas UK
1. Blackpool Blackpool Middlesbrough
2. Manchester Knowsley Liverpool
3. Knowsley Liverpool Knowsley
4. Liverpool Kingston upon Hull Kingston upon Hull
5. Barking and Dagenham Middlesbrough Manchester
6. Birmingham Manchester Blackpool
7. Hackney Birmingham Birmingham
8. Sandwell Burnley Burnley
9 Kingston upon Hull Blackburn with Darwen Blackburn with Darwen
10. Nottingham Hartlepool Hartlepool

How do I check if my postcode is in an expensive life insurance area?

All life insurance postcodes falling within all deprived areas in the UK can easily be looked up online using the MHCLG’s online look-up tool.

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Who are the best life insurance providers UK?

According to research, here’s a selection of the most reputable term life insurance providers in the UK, most of which Bobatoo works with:

Top 10 life insurance companies in UK

  1. Legal & General
  2. Aviva
  3. VitalityLife
  4. AIG
  5. Zurich
  6. Liverpool Victoria (LV)
  7. Scottish Widows
  8. Royal London
  9. Aegon
  10. Canada Life

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2 Actuarial Post

3  The Office of National Statistics

4  The English Indices of Deprivation 2019

5  IoD2019 technical report

6  Reassured