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Decreasing term life insurance is a policy designed to help cover a repayment mortgage.
The sum assured decreases over time, aligning with the remaining mortgage balance.
Decreasing term life insurance is generally cheaper as the risk to the insurer decreases over time.
The sum assured decreases throughout the policy term, resulting in a smaller payout for your loved ones later on.
The maximum sum assured in Decreasing Term Life Insurance depends on several factors, including the policyholder’s income, mortgage balance, and the insurer’s underwriting criteria. While some providers set a fixed cap (e.g., £750,000 with Royal London), many insurers base the maximum sum assured on a multiple of the policyholder’s annual income, typically 10 to 15 times. It is best to check with individual insurers for specific limits.
The term length can be up to 40 years.
It helps protect your mortgage by aligning the coverage with your outstanding balance.
Without coverage, your family may struggle to afford mortgage repayments, leading to downsizing or selling the home.
Our highly experienced Advisers are ready to help you with either buying or remortgaging a home, protecting your property and lifestyle along with saving you time and effort, ensuring you have a competitive deal right for you.
There are 10.97 million UK homeowners who rely on a mortgage.
As of Q3 2024, the average mortgage debt per household in the UK is approximately £133,508. However, for households with an active mortgage, this figure rises to £193,867. The exact amount varies based on factors such as property location, loan term, and interest rates.
Between October and December 2024, the following mortgage possession actions took place in England and Wales:
This marks an increase compared to the previous year, reflecting economic conditions and interest rate trends. Regular updates from the UK government and courts provide the most current figures.
No, it is not suitable for covering an interest-only mortgage.
It may not be suitable for those purposes as the coverage decreases over time.
It is typically suitable for covering the balance of a repayment mortgage or providing a declining inheritance.
The risk to the insurer decreases over time, resulting in lower premiums.
The cost is determined by factors such as the desired coverage, policy term, age, smoking status, health, and medical history.
Level term insurance maintains a fixed sum assured, while decreasing term insurance reduces the sum assured over time.
Your loved ones can make a claim to receive the life insurance payout.
Joint decreasing term life insurance covers two individuals under one policy, usually saving around 25% compared to two separate policies.
Joint life insurance policies pay out only once (on the first death), which may leave the surviving partner uninsured. However, for mortgage coverage, it can be sufficient.
No, life insurance is not a legal requirement, but it is generally recommended.
Your family may be left responsible for repaying the mortgage, potentially leading to selling the home or facing financial difficulties.
Remortgaging can impact the suitability of decreasing term cover due to changes in the amount owed and interest rate.
Contact your insurer to align your policy with the new mortgage terms and consider obtaining quotes from brokers to secure a better deal.
Yes, it can also help cover outstanding debts or provide coverage when a large payout is less essential over time.
Level term insurance maintains a fixed sum assured throughout the policy term, providing a consistent payout. In contrast, decreasing term insurance aligns the sum assured with your mortgage balance, gradually decreasing over time.
Yes, it is possible to write your decreasing term life insurance policy in trust.
Writing your life insurance in trust can help minimize inheritance tax, expedite the claims process, and provide better control over the payout distribution.
Our highly experienced Advisers are ready to help you with either buying or remortgaging a home, protecting your property and lifestyle along with saving you time and effort, ensuring you have a competitive deal right for you.
Get in contact for a free consultation with one of our expert advisers.
LEGAL
YOUR HOME MAY BE REPOSSESSED IF YOU DO NOT KEEP UP REPAYMENTS ON YOUR MORTGAGE.
Multi Broker Ltd is an Appointed Representative of The Right Mortgage Ltd, which is authorised and regulated by the Financial Conduct Authority. Registered in England and Wales no. 13090970. Registered Address : Foundry House Suite 20, Waterside Lane, Widnes, United Kingdom, WA8 8GT . Our FCA reference number is 946302.
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