How are life insurance premiums calculated?
Learn about life insurance premiums. Find out how they work and what affects the price of Tesco Life Insurance.
Published: 1 July 2026
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Life insurance premiums explained
When you start looking at life insurance one of the first things to think about is the premium. That's the amount you pay each month or each year. But what does it actually mean? And why might two people get very different quotes?
In this guide, we look at:
- the definition of insurance premiumsthe definition of insurance premiums
- the key things insurers consider when calculating life insurance premiumsthe key things insurers consider when calculating life insurance premiums
- the cost of life insurance vs coverthe cost of life insurance vs cover
What is a life insurance premium?
A premium for life insurance is the price you pay for cover. Think of it as a regular payment you make to keep your policy active.
When you take out a Tesco Life Insurance policy, you can choose:
- the type of policy you want - joint or single life insurancethe type of policy you want - joint or single life insurance
- the type of cover you want: Family Protection (level term) or Mortgage Protection (decreasing term)the type of cover you want: Family Protection (level term) or Mortgage Protection (decreasing term)
- how much cover you want (the cover amount) - up to £5 millionhow much cover you want (the cover amount) - up to £5 million
- how long you want cover for (the policy term) - from 5-50 yearshow long you want cover for (the policy term) - from 5-50 years
Your premium is based on your choices. It’s also based on things Aviva, our life insurance provider, need to know about you.
If you’re new to life insurance, you can learn more about it in our guide - What is life insurance?
We’ve also got a handy jargon buster explaining some of the key terms - life insurance glossary.
Why do people get different life insurance quotes?
Life insurance is designed around your personal circumstances. That means two people can choose the same amount of cover but still pay different premiums. This isn’t random. Insurers use risk and statistical data to work out how likely they are to pay a claim during the policy term.
What affects your life insurance premium?
There are several key factors when calculating premiums for life insurance. Including:
Your age
Age is one of the biggest factors affecting your life insurance premium.
- The younger you are, the lower your premium is likely to be.The younger you are, the lower your premium is likely to be.
- As you get older, there’s an increased risk of health issues - so there’s usually an increase in the cost of cover.As you get older, there’s an increased risk of health issues - so there’s usually an increase in the cost of cover.
Your health
Your insurer will usually ask about:
- your height and weightyour height and weight
- any existing medical conditionsany existing medical conditions
- medications you takemedications you take
- your family medical historyyour family medical history
This helps them to understand what your long term health is likely to be.
When you apply for Tesco Life Insurance, you’ll need to complete a quick health questionnaire with Aviva, our life insurance provider.
In some cases, Aviva might need to ask your GP for more information, but they’ll ask for your permission first.
Your lifestyle
Everyday choices also play a role in how life insurance premiums are calculated. Your insurer might ask about:
- whether you smoke or vapewhether you smoke or vape
- how much alcohol you drinkhow much alcohol you drink
- hobbies - like climbing, scuba diving, or other high risk activitieshobbies - like climbing, scuba diving, or other high risk activities
If something increases the chance of illness or injury, it can increase your premium
Your job
Most jobs don’t affect your premium. However, some that involve physical risk - such as working at heights or with heavy machinery - could lead to higher premiums.
If your job is office based or low risk, it usually has no impact on your premiums at all.
The type of cover you want
The type of policy you go for can also affect your life insurance premiums.
With Tesco Life Insurance, you can choose level term or decreasing term life insurance.
Level term life insurance - Family Protection
- Your cover amount stays the same throughout your policy.Your cover amount stays the same throughout your policy.
- Premiums are usually fixed.Premiums are usually fixed.
You can learn more about this type of cover in our guide - What is level term life insurance?
Decreasing term life insurance - Mortgage Protection
- Your payout reduces over time, often to help cover the balance on a repayment mortgage.Your payout reduces over time, often to help cover the balance on a repayment mortgage.
- Premiums can be lower than with level term life insurance. That's because the cover amount goes down throughout the policy term.Premiums can be lower than with level term life insurance. That's because the cover amount goes down throughout the policy term.
You can learn more about this type of cover in our guide - What is decreasing term life insurance?
How much cover you want
This is the called the cover amount. It’s how much the policy will pay out if you die during the policy term.
Simply put:
- Higher payout = higher premiumHigher payout = higher premium
- Lower payout = lower premiumLower payout = lower premium
How long you want cover for
This is how long your policy will last - known as the policy term.
Longer policy terms generally cost more because there’s more chance of a claim.
What doesn’t affect your life insurance premium?
People are often surprised to learn that some things don’t affect the premium for life insurance.
For example:
- Your incomeYour income
- Your savings or financial situationYour savings or financial situation
- Your genderYour gender
- Your marital statusYour marital status
These things aren’t taken into account when calculating life insurance premiums.
The cost of life insurance vs cover
Life insurance is designed to help protect the people who depend on you financially. However, cost can often be a barrier.
According to our research, cost is the biggest reason Brits don’t have life insurance.
- 36% of people surveyed said life insurance is too expensive**.36% of people surveyed said life insurance is too expensive**.
If you’re looking for cover, it’s worth remembering that a number of things can affect your premiums. And there might be an affordable option.
With Tesco Life Insurance:
- Quotes start from £5 a month.Quotes start from £5 a month.
- You’ll get an exclusive discount with your Clubcard.You’ll get an exclusive discount with your Clubcard.
- You’ll get a welcome gift after you’ve paid 6 months’ premiums. Available on policies with a 3 year minimum term. T&Cs apply. You’ll get a welcome gift after you’ve paid 6 months’ premiums. Available on policies with a 3 year minimum term. T&Cs apply.
If you get a quote, there’s no obligation. And you can adjust your cover amount and policy term to find a premium that suits your budget.
Can you reduce the cost of life insurance?
Here are a few ways you might be able to lower your premium.
- Have cover in place as early as possible.Have cover in place as early as possible.
- Choose a lower amount of cover - as long as it still meets your needs.Choose a lower amount of cover - as long as it still meets your needs.
- Stop smoking - insurers usually class you as a non smoker after 12 months without nicotine.Stop smoking - insurers usually class you as a non smoker after 12 months without nicotine.
- Maintain a healthy lifestyle, including a balanced weight.Maintain a healthy lifestyle, including a balanced weight.
The right choice depends on your own personal circumstances.
You can learn more about the cost of life insurance in our guide - How much does life insurance cost?
Summary: calculating premiums on life insurance
Life insurance premiums are calculated using a mix of personal information and your policy choices. Understanding these things can help you feel more in control when comparing quotes. And help when deciding on the right level of cover.
Key factors include:
- AgeAge
- HealthHealth
- LifestyleLifestyle
- OccupationOccupation
- Policy typePolicy type
- Cover amount and policy termCover amount and policy term
By knowing how premiums are worked out, you can make informed decisions about protecting your family’s future.
Why get Tesco Life Insurance?
At Tesco Insurance, we want to help you with the things that matter most. That’s why Tesco Life Insurance comes with a Big Win and lots of Little Helps.
- Clubcard Prices - Get an exclusive discount on Tesco Life Insurance with your Clubcard.Clubcard Prices - Get an exclusive discount on Tesco Life Insurance with your Clubcard.
- Your Big Win - Get a welcome gift after you've paid 6 months' premiums. Available on policies with a 3‑year minimum term. T&Cs apply.Your Big Win - Get a welcome gift after you've paid 6 months' premiums. Available on policies with a 3‑year minimum term. T&Cs apply.
- Your Little Helps - Get a full year of coupons in your Tesco grocery app to help you shop at Tesco. T&Cs apply.Your Little Helps - Get a full year of coupons in your Tesco grocery app to help you shop at Tesco. Available on policies with a 3‑year minimum term, Clubcard app required and must be opted in to Tesco marketing. T&Cs apply.
As well as your Tesco benefits, you’ll also get health and wellbeing services from Aviva.
Tesco Life Insurance is provided and administered by Aviva, who have a 5-star Defaqto rating for life insurance and pay out on 98.7% of claims*.
About our data
*Aviva 2026 Claims report. This covers claims made across all life insurance policies in 2025.
**All figures are taken from an online survey conducted by WALR on behalf of Tesco Insurance between 11 and 25 July 2025. The survey included a sample of 2,008 UK consumers under 55 years of age.
Important information
About Tesco Life Insurance
Tesco Life Insurance is arranged, administered and underwritten by Aviva Life & Pensions UK Limited.
Tesco Personal Finance Ltd acts as an introducer to Aviva Life & Pensions UK Limited which is authorised by the Prudential Regulation Authority and regulated by the Financial Conduct Authority and the Prudential Regulation Authority. Member of the Association of British Insurers. Firm Reference Number 185896.
Aviva Life & Pensions UK Limited. Registered in England & Wales No. 3253947. Registered Office: Aviva, Wellington Row, York, YO90 1WR. Tesco Personal Finance Ltd and Aviva Life & Pensions UK Limited. are not part of the same corporate group.
About Tesco Insurance
Tesco Insurance is a trading name of Tesco Personal Finance Ltd, Registered Office: 2 South Gyle Crescent, Edinburgh, EH12 9FQ (registered in Scotland, no SC173199) which is authorised and regulated by the Financial Conduct Authority (register no. 186022).
Aviva DigiCare+ app
With the Aviva DigiCare+ app, you can start using a range of health and wellbeing services when you take out your policy.
Members of your family can use it too, as long as they're eligible.
The Aviva DigiCare+ app is provided by Square Health. The services are provided by Square Health and other selected partners.
You'll find full details about the services in the app, along with the terms and conditions, residency restrictions and privacy policy.
Aviva DigiCare+ is a non-contractual benefit that could be changed or withdrawn by Aviva at any time. So, it won't appear in any contract you've signed, or in any terms and conditions.
Life Insurance policy booklets
Please check the policy documents to make sure the cover you’ve chosen meets your needs.
The policy booklet and product information documents tell you about the benefits, limitations and exclusions that’ll apply to your cover.
Tesco Life Insurance is provided, administered and underwritten by Aviva Life & Pensions UK Limited.
Aviva have a 5-star rating for life insurance from Defaqto. And they pay out on 98.7% of life insurance claims*.
*Aviva UK individual claims report 2026, based on claims paid in 2025.
Learn more about Life Insurance
Find the right cover to give financial support to your family after you’ve gone. Tesco Life Insurance comes with Clubcard Prices, some great Tesco shopping benefits and Aviva DigiCare+.