What is Decreasing Term Life Insurance?
Decreasing Term Life Insurance (often referred to as Mortgage Term Life Insurance), pays out the outstanding balance of your cover amount, which decreases over time, should you die within the insurance policy cover period. This type of insurance could also cover your family for any other debts you have that could decrease in the future, such as credit card debts or loan repayments.
Decreasing Term could provide you with the cover amount you need right now, then gradually decreases as the policy ages. For this reason decreasing term Life Insurance is often a cheaper policy than Level Term insurance.
Decreasing or Level Term?
With Level Term your family can:
- Maintain their living standards
- Clear any debts
- Pay-off any mortgage
With Decreasing Term you can:
- Protect your loved ones from a reducing debt, such as a mortgage
- Get a cheaper premium than with Level Term (for the same initial cover amount)
- Still get a fixed premium over your policy term
Tell me more about . . .
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Our policy is not directly linked to your mortgage, as the pay-out can be used to cover any debt. Although it is most often used to cover mortgage debt.
Our policy decreases in line with a mortgage that has a 6% interest rate; this is why your cover amount will reduce over the policy term.
If your mortgage interest rate is less than 6% then our policy could clear the outstanding debt.
Both policy types could be valuable
If you’re still unsure what type of policy will best suit your needs then it’s worth considering both, as they each cater for different needs. A Decreasing Term policy could act as a top up to your existing cover. This could be valuable in a scenario whereby your current Life Insurance was taken out some years ago and that cover amount no longer meets your needs, possibly due to upgrading your home.
The cover amount cannot be amended once a policy has been created, so in this scenario Decreasing Term could add more cover to match the new value you need.
Your next decisions:
How much cover do I need?
Don’t know how much cover you need? Use our handy Life Insurance calculator for help.
Check out our collection of handy guide pages to help answer any further questions you may have about Life Insurance.