Compare Decreasing Life Insurance

How does decreasing term life insurance work?

Before taking out decreasing term life insurance, you’ll need to decide how long you want your policy to run – this is known as the policy term. These terms can vary between life insurers, so check what options are available. If the policy is being used to protect a mortgage or other type of loan, you might want the terms to be the same.

You must also decide the initial amount that you want the policy to cover. For mortgage protection, this will often be the outstanding mortgage amount, but you can ask for more cover or less. The amount that decreasing term insurance pays out falls as the policy term goes on until at the end of the term, there will be no payout at all.

The monthly premium payable for the cover is agreed at the outset. When you apply online through LifeSearch these premiums are fixed and won’t change for the duration of the term, unless you request changes to your cover.

A policy will only pay out if you die – or if you have a terminal illness benefit option included in your policy and are diagnosed as terminally ill with a life expectancy of usually less than 12 months – within the policy term. A life insurance policy might not pay out for a range of reasons including if you die because of a medical condition you’ve not disclosed to the insurer when arranging the policy, or due to drug or alcohol misuse.

If you are in financial difficulty and are considering missing a monthly payment, contact your life insurance provider to discuss your options. Insurers won’t generally pay out if you’ve missed any monthly premiums, though some may offer a grace period if you have a good reason for delaying your payment, but it's imperative you speak to them before you miss a payment.

If the policy term ends before you die, you have no further premiums to pay, but the policy won’t pay out a lump sum to your beneficiaries when you do pass away. You won’t receive anything for outliving the policy either.

What is the difference between decreasing and level term life insurance?

Both types of life insurance are designed to pay a lump sum to your beneficiaries should you die during the policy term. However, whereas the payout amount remains the same for the duration of a level term life insurance policy, the payout from decreasing term insurance falls the further into the policy term you go.

This contributes to the other main difference between decreasing and level term insurance – the price. Because the amount an insurer needs to cover you for reduces, the premiums for decreasing term insurance are usually cheaper than the equivalent level term insurance.

» COMPARE: Level term life insurance quotes

How much cover do I need?

If you’re getting decreasing term insurance as protection for a repayment mortgage (or similar debt), you would normally look to cover the mortgage amount you have outstanding to try to make sure it is paid off. Then, as the amount you owe on your mortgage decreases, so the cover offered by your policy should similarly fall in line.

If you are considering decreasing term insurance for less than the full mortgage amount, or for any other reason, including to provide loved ones with a payout above simply covering the mortgage, this can often prove more difficult to work out.

Think carefully about how much income your family might have to live on if you were to die and whether your partner or spouse’s ability to work might be affected. And if you want decreasing term insurance to provide your children with some financial protection until they are of an age when you think they should be able to fend for themselves, remember that life doesn’t always go to plan.

Also take into consideration any other protection policies you might already have in place, as well as any death in service benefits from your work, and any readily accessible savings, investments and pensions you might have.

Looking at it from a different angle, you also need to work out how much you can comfortably afford to spend on monthly premiums. You can contact a LifeSearch adviser if you are unsure of the amount needed for your individual circumstances

How can I compare decreasing life insurance?

You’re able to get and compare decreasing term life insurance quotes tailored to your personal situation right here thanks to our partnership with LifeSearch. The quote process is made easy by breaking it down into simple bitesize steps.

And if you’re unsure of anything, you’ll find plenty of guidance along the way, readily available without losing your place in the journey as well as the option of speaking to a LifeSearch adviser by simply leaving a phone number during the quote process.

» COMPARE: Decreasing life insurance quotes