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Decreasing term life insurance for mortgages

Decreasing term life insurance for mortgages

Category: Insurance

Updated: 08/03/2017
First Published: 25/08/2010

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 level 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 pay-out, 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:

  • the sum you wish to be insured for,
  • the term you are taking the cover for,
  • your age at the time of taking out the policy,
  • your health status,
  • whether you smoke (you will be classed as a smoker if you have smoked within the last 12 months).

Using a life insurance broker to get a decreasing term life insurance quote

Moneyfacts.co.uk offers a life insurance service which is provided by Active Quote Insurance services. They can help you find the best life insurance deal. Complete the simple, no -obligation form and they will compare policies from a range of leading insurers to find you a policy that meets your needs.

What Next?

Get a quote for Decreasing Term Insurance

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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