Decreasing Cover Life Insurance

> Decreasing cover life insurance is perfect for protecting your mortgage. Compare the market and save up to 40% on decreasing life insurance.

This is a type of term life insurance that is popular with those taking out a repayment mortgage.

What is decreasing cover life insurance?

This is a popular type of cover where the lump sum pay-out reduces over the length of the term of the policy. It is often referred to as ‘Mortgage Life Insurance’ as the amount that the cover pays out often decreases in line with the outstanding amount on a typical repayment mortgage.

My mortgage broker mentioned this

Historically decreasing cover life insurance has been taken out at the same time as actually taking out the underlying mortgage. This usually means that you are paying well over the odds, as the mortgage providers simply do not offer competitive rates. Just because you have an existing policy does not mean you cannot change to a more competitive offering and save literally £1000’s over the life of the policy. Remember that it is very rare, if ever, that you are obligated to take out life cover with the bank or mortgage company that has organised your mortgage as this is anti-competitive.

Main benefits

Because the tax-free lump sum that pays out decreases over time with your mortgage, the premium costs of a decreasing cover life insurance are lower than the premium costs of level cover policy. You also have peace of mind that if the worst was to happen your loved ones would not have to sell the family home. Even if you are single then you could be in a position of negative equity where the value of the property is lower than the outstanding mortgage, this is the reason your mortgage broker is so keen on you getting covered.

Main drawbacks

Other than the fact you have to pay a monthly premium, the main drawback is that if you were to die unexpectedly the cash pay-out would only be enough to cover the mortgage, there would not be further money to help your family adapt the their new circumstances. Also the cover does not include extras such as income protection or critical illness cover. So if you were unable to work due to an accident or illness you would not get any financial assistance from simple decreasing mortgage cover.

Alternatives

The main alternative is level term cover, which works in the same way but the ‘face value’ of the policy does not decrease over time. This costs a little more but you know the exact amount the plan would pay out no matter when you die during the term. More expensive options such as real life cover exist, and they include income protection as well as critical illness insurance.

Cheap decreasing cover life insurance

We work with independent life insurance experts who will discuss your personal circumstances and make sure you get the appropriate life cover at the best price.