Decreasing term life insurance is also known as life insurance for mortgages, as this type of cover is normally taken out when you buy a mortgage or remortgage your property. It's only suitable for mortgages on a repayment basis, and isn't used for interest-only mortgages.
It's a specific type of insurance and will cover you for the term of the mortgage (or a set term if you choose), and pays out a lump sum if you die during the policy term.
As the name suggests, the life cover reduces over the term of the policy, however the monthly payments are designed to stay the same for the duration. This type of policy usually ties in with the outstanding amount on your mortgage.
If you want to provide your family or loved ones with cash to pay off a repayment mortgage, decreasing term insurance could be right for you. If you have other debts or bills that do not reduce over time, you might need to consider a level term assurance policy to cover these.
In general, you will find that decreasing term life insurance is normally cheaper than term life insurance for the same initial sum insured.
But be aware: this policy will only pay out if you die during the term of the policy. If you are diagnosed with a critical illness you will NOT receive a payout, unless you added critical illness cover to the policy at the outset.
The monthly premium you're quoted will be affected by a number of things, including:
Compare brokers as you would direct insurance policies. Get quotes from a couple of brokers to compare prices and policies.
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Speak to an adviser about your life insurance needs
Disclaimer: This information is intended solely to provide guidance and is not financial advice. Moneyfacts will not be liable for any loss arising from your use or reliance on this information. If you are in any doubt, Moneyfacts recommends you obtain independent financial advice.
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