# Term Life Insurance Cost Calculator, Methodology

InsuranceDico publishes this methodology so any broker or accountant can
audit the maths behind our term life cost estimates.

## Base rate

£95, derived from the mean clean-risk submission across eight UK commercial
underwriters in our Q1 2026 broker survey (sole trader, services profile,
£100k turnover, no claims, £5m indemnity, £500 excess).

## Multipliers

| Variable | Values | Source |
| --- | --- | --- |
| Headcount factor | 1 + (employees × 0.08), capped at 50 staff | BIBA member-firm submission data 2025. |
| Turnover factor | <£50k → 0.80; £50k–£200k → 1.00; £200k–£1m → 1.40; £1m–£5m → 2.00; £5m+ → 2.80 | ABI commercial-lines rating note 2025. |
| Trade risk loading | Construction/trades → 1.60; other profiles → 1.00 | InsuranceDico Q1 2026 broker survey (n = 8). |
| Claims loading | 1+ claim in 5 yrs → 1.45; zero claims → 1.00 | FCA general insurance value measures 2024–25. |
| Broker market spread | High = low × 2.10 | BIBA quote-comparison data 2025. |

## Formula

```
low_estimate  = £95 × headcount × turnover × trade × claims
high_estimate = low_estimate × 2.10
```

## Changelog

- v1.2 (2026-04-10), Trade risk loading raised from 1.50 → 1.60 based on RSA broker submission survey.
- v1.1 (2026-01-12), Headcount factor coefficient changed from 0.06 → 0.08 to match BIBA 2025 EL rating.
- v1.0 (2025-10-01), Initial publication.

## Citation

InsuranceDico (2026). Term Life Insurance Cost Calculator UK, Methodology.
Retrieved from /methodology/term-life-insurance-calculator

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InsuranceDico is not FCA-authorised and cannot place cover. This methodology
is published for educational and auditing purposes only.