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If you own a repayment mortgage or have loans and debt that you pay off gradually that may be difficult for your loved ones to afford without you
Compare quotes on life insurance to cover debts and loans
We work with the UK’s leading life insurance providers to help you find the right policy for the right price, giving you and your loved ones peace of mind.
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Decreasing life insurance is a type of term life insurance with a pay-out that decreases over time. Its main purpose is to protect a repayment mortgage because it decreases in line with the remaining balance of your mortgage as you pay it off.
So, if you die at any point during your policy’s term, your life insurance policy should allow your loved ones to pay off your remaining mortgage debt, ensuring that they can stay in their home without having to worry about mortgage payments. If you’re using your decreasing-term policy to cover a mortgage, the term will probably last as long as the mortgage does – so your loved ones will always have enough to keep the house.
At the start of your policy, you would normally select a pay-out value that matches your remaining debt, and your term would be decided based on your monthly mortgage payments and how long it would take you to pay off the full amount. Once your policy is in place, you’ll be covered in the event of your death or diagnosis of a terminal illness.
While your benefit decreases over time, your premiums will stay the same throughout your policy. There’s no need to annually renew your policy, and your cover will last until the end of your policy’s term or until you stop paying your premiums. If you pass away during your policy’s term, your loved ones will receive a lump sum payment which can be used to pay off your remaining mortgage debt.
If you own a repayment mortgage or have loans and debt that you pay off gradually that may be difficult for your loved ones to afford without you
You are looking for life insurance cover that lasts for a limited time – maybe to support your children until they become self-sufficient
If you're on a tight budget but still want life insurance protection, decreasing term is the cheapest policy type with premiums that are usually fixed
Decreasing life insurance has some unique benefits that might make it the right fit for you and your loved ones.
Decreasing life insurance is the cheapest life insurance type so can be a good option for budget insurance
Your policy can cover your mortgage and debts that might burden your loved ones, saving them from affording monthly payments
A decreasing benefit saves you from manually reducing your cover as your children grow up and become self-sufficient
The value of your policy falls to zero, so if you survive past the term's end there’s no chance of a pay-out
It’s unlikely to help your loved ones cover other financial problems related to your death, such as covering funeral costs
Decreasing term life insurance is intended for repayment mortgages, not interest-only mortgages, so may not be suitable for everyone
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"Something important to consider when taking out your policy is that decreasing term life insurance is vulnerable to the effects of inflation. This means that over time, the value of your policy may reduce, and the pay-out might not cover what you intend it to. To avoid this issue, you will need to take out extra cover, or otherwise consider index-linked life insurance which increases in line with the Retail Price Index.
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While decreasing term life insurance tends to be the most affordable type of policy,the cost will depend on your unique circumstances. When you apply for your policy, your provider may ask you for the following details, which will determine how much your premiums will be:
The older you get the more health problems you experience, so life insurance tends to become more expensive as you age
The type of life insurance policy, your chosen pay-out amount, and term you choose can have a big effect on your policy price
Having a history of medical problems can make life insurance expensive, or require you to get a specialised policy
Leading a dangerous lifestyle or having bad habits that affect your health – like smoking – can lead to an increase in premiums
Neither policy type is better than the other, but they are better suited to different circumstances.
Level term policies have a pay-out and premiums stay the same throughout your policy. This makes it a better choice for those that want long-lasting protection for their loved ones or want to cover more than just debts with their life insurance.
Decreasing term insurance is a good solution if you want to cover any big financial commitments. Because of its reducing benefit, it’s unlikely to cover more than loan debt, but it can be useful as you don’t have to manually reduce your cover over time to match your changing circumstances.
Answer some questions for us about you, your medical history, and the level of protection you want which we can match to policies.
We have some of the top UK providers on our panel for you to choose from. Browse deals ordered by lowest premium.
Once you’ve found the policy that’s right for you, all it takes is a click for you to buy your policy today for the price you see.
If you’re not sure what life insurance cover you need or have questions that we haven’t answered in our life insurance guides, there is help for you. We have partnered up with LifeSearch to provide our customers with life insurance guidance and advice to help them find the right cover.
It’s free of charge. You can get in touch by calling 0800 197 3178.
Their opening hours are:
Monday to Friday: 8am – 8pm
Saturday: 9am-2pm
Sunday: 10am – 3.30pm
A life insurance policy isn’t a mandatory requirement for you to take out a mortgage and there are a lot of lenders that will approve you without one. However, there are some mortgage lenders that may require you to take out a life insurance policy. This might be a general pre-requisite that they apply to everyone to mitigate risk, or it may be because they deem you specifically to be a higher credit risk.
For more information about this subject, you can check out our guide ‘Do I need life insurance for a mortgage?’
At the end of your life insurance policy’s term, the cash value of your policy will reach zero upon the final decrease, and your policy will end. You then will need to take out a new life insurance policy to restart your cover.
In some cases, you can change the term and benefit amount of your policy. Some providers will allow this for certain life changes, such as having a child or moving home. Providers, however, will require evidence of these events and have limits for how much you can extend your cover. They may also charge you a fee for making these changes.
Yes. You can get a joint decreasing term life insurance policy. This type of policy will cover two people at the same time for the same amount. However, the policy will only pay out once. At MoneySuperMarket, we can provide quotes for first-death joint life insurance policies, which are policies that pay out after the death of the first policyholder.
Yes. You can add critical illness cover to a decreasing term policy. Critical illness cover will allow you to claim on your life insurance if you are diagnosed with one of the critical illnesses listed in your policy documents.
For more information about what defines a critical illness, you can read our guide ‘What does critical illness insurance cover?’
There are several different types of life insurance that are designed for specific circumstances, each with their own unique benefits.
Level term: Pay-out and premiums stay the same for the entire length of your policy
Increasing term: Pay-out and premiums increase in line with inflation to retain value over time
Whole of life: Lasts for your whole life with a guaranteed pay-out
Joint life: Covers two people under one policy, but only pays out once
Over 50s: Offers special cover for over 50s with limited or no medical checks
Critical illness cover: Pays out once for diagnosis of a critical illness or the death of the policyholder
Yes. You can cancel your life insurance policy at any time and for any reason if you don’t feel that you need it anymore. All you need to do is contact your provider by email or phone to have your policy cancelled. However, there are some conditions to cancelling your policy.
Most providers may charge you a cancellation fee. You also won’t receive any return on the premiums you have already paid into your policy.
The exception to this is if you cancel within the first 30 days of your policy. Cancelling during this time means that you should be refunded what you have already paid into your policy. This is a legal requirement for all UK life insurance providers.
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