Decreasing term life insurance

Life insurance is one of those things that people dislike talking about. But the fact is it’s something you really should talk about. Taking out Life insurance is one of the most selfless thing you can do, as it means your loved ones will be looked after financially if the worst should happen and you pass away. So if you have a family or people that rely on your income, you probably want to start thinking about what you have in place to make sure they’re protected and taking out life insurance could be just what you need to make sure that happens.


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What is decreasing term life insurance?

It’s a type of life insurance that you agree to pay premiums for over a fixed period of time (the ‘term’ of the policy). What decreases is the pay out that your loved ones will receive. This type of policy is often taken out if you want to cover the outstanding balance of a repayment mortgage as this will decrease over time. As the amount that could be paid out decreases over time it normally means that the monthly cost of a decreasing policy is lower than that of a level term policy as the overall pay-out is lower. Remember your monthly premium stays the same over time, it’s the balance paid out that decreases.

This policy is called a term policy as your insurance provider will only pay out if you were to pass away during the term (or agreed period) of the policy. If you don’t pass away within the policy term, then you or your family won’t receive a payout and you won’t get any of your premiums back, as with most insurance products. You’ll have to take out a new policy if you want the security of life insurance to continue.

Who is decreasing term insurance suitable for?

Because the payout reduces over time, it’s useful for people whose financial commitments that reduce over time too. For example, if you’re repaying a mortgage, the amount of money needed to cover the mortgage will naturally decrease as you pay it off. Or if you have children, the amount of money you may want them to receive might reduce as they grow up and become more self-sufficient.


Benefits of decreasing term life insurance

Premiums for decreasing life insurance tend to be lower than for other types of life insurance. This is because the amount of money your insurer needs to pay out reduces over the course the policy period, unlike with level term life insurance . So decreasing life insurance might be a good option if you’re on a tight budget but don’t want to sacrifice the security of having a policy in place.

Whether you need any form of life insurance is up to you, it depends on lots of factors such as – do you have a family; is your income relied on to pay the mortgage; can you afford the premiums?

What other options do I have?

Another option is level term life insurance. This is similar to decreasing term insurance in that you choose the period of time the policy runs for. However, with level term insurance, the lump sum payout in the event of your passing (as long as you pass away within the policy period) is fixed so that your loved ones are guaranteed an agreed amount of money.

Alternatively, whole of life policies, as the name suggests, guarantees a payout regardless of when you die – these tend to have the highest premiums of all life assurance policies. For more information on whole of life policies, call our advisors at Life Search on 0800 072 1141 (Mon-Fri 8am - 8pm Sat 9am - 2.30pm). They're really friendly and just at the end of the phone to help you figure out just what you need.

Making a choice

Choosing what cover you need can be daunting, which is why we’re here to help. At, complicated just isn’t our style so we’ll ask you a few simple questions and then we’ll bring you options so that you can choose what’s best for you, your family and your budget.

Life insurance doesn’t have to be expensive – on average we found that people we helped could find a policy from as little as £5 a month** – not much for long term peace of mind. So why not start a quote online today or if you’d prefer to talk through your options in more detail. Or you can call us on 0800 072 1141 (Mon-Fri 8am - 8pm Sat 9am - 2.30pm) and one of our advisors at LifeSearch will be able to guide you.


**50% of people can achieve a premium of £5.00  a month based on April 2015 -  May 2016 cheapest premiums. Based on £100,000 decreasing term policy over 10 years with guaranteed premiums for a non-smoker, aged 30.

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