Protection matters

Decreasing term insurance is a type of life insurance that can be particularly beneficial for those who have a capital and interest only mortgage. With this type of policy, the amount of cover decreases over time in line with your outstanding loan or mortgage balance.

With the rising costs of living, many of us are finding we have less disposable income so having cover in place could mean your loved ones get to stay in their family home without the worry of mortgage payments after you’re gone.

APPROPRIATE LEVEL OF PROTECTION

This type of cover is designed to ensure that your family will not be burdened with an outstanding debt should you die while the mortgage is still outstanding and means that you are paying for an appropriate level of protection throughout the length of your agreement. With decreasing term insurance, you will only pay for the amount of cover that you actually need.

The premium itself does not decline. It is set at a certain amount to reflect the overall cost of the policy from start to finish, and it then stays the same for the duration of the policy.

THE AMOUNT YOU’LL PAY FOR YOUR PREMIUMS WILL STILL DEPEND ON FACTORS SUCH AS:

• your age
• whether you smoke
• your health and family medical history
• your occupation
• the amount of cover you choose
• the length of your policy

AT GREATER RISK OF A CLAIM

The older you are when you take out life insurance, the more expensive it will be. This is simply because there will be a greater risk of a claim being made – not only are you older, it’s also more likely you’ll have health issues. Because of this, it can pay to take out life insurance while you’re young.

Decreasing term life insurance is only suitable if you have a repayment (capital and interest) mortgage. It won’t be suitable if you have an interestonly mortgage where you only pay off the interest each month and pay off the full amount borrowed in one go at the end of the mortgage term.

REALISTIC AMOUNT OF COVER

If you have an interest-only mortgage, you need term insurance that promises to pay out a set sum at any point during the term – a policy known as ‘level’ term insurance. Ultimately, decreasing term insurance enables you to ensure that your family is protected in the event of your death, while also making sure that you are paying for a realistic amount of cover.

If you are looking for protection over a capital and interest only mortgage, a decreasing term insurance policy can provide the perfect solution.

Don’t forget, our professional friendly advisers are on hand to support you and can help you explore all of your options.