LIFE ASSURANCE

Decreasing Life policies (Mortgage Protection) are designed specifically to cover a reducing debt.  Each year that the life assured lives, the initial sum assured payable decreases usually on a fixed scale until by the end of the term it is zero. The idea is that as the mortgage debt goes down so does the amount of life cover. As the amount paid out by the life company reduces each year it is cheaper than Level term assurance.

Level term policies are used to support interest only mortgages, which are not supported by endowments.  The level of cover remains the same throughout the term of the policy, as the amount of debt is also constant.

People who are taking out Buy to let mortgages without a repayment plan in place are advised to take out level term assurance rather than decreasing.

Also if you are considering a flexible, offset or current account mortgage you have to consider whether decreasing or level would be best. If you might borrow back up to your agreed limit at some point in the future then decreasing may leave you with a life cover shortfall.

If you wish to arrange Insurance policies you should complete our one minute enquiry form. The service is free and there is no obligation quotation.