Decreasing term life insurance

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What is decreasing term life insurance?

Decreasing term life insurance is a type of life insurance policy that pays out less over time. It’s often used to help pay off what’s left on a repayment mortgage. This is because the balance of a repayment mortgage goes down over time and is paid off in full by the end of the policy.

The policy will pay out if you die while you’re covered
Your provider may also pay out earlier if you’re diagnosed with a terminal illness – check the terms before you buy, so you know for sure.

Some policies let you add critical illness cover for an extra cost, which could pay out if you’re diagnosed with a serious illness or injury.

Quick tip

Decreasing term life insurance doesn’t cover your mortgage payments if you can’t work because of illness. For that, you could look at mortgage protection insurance.

How does decreasing term life insurance work?

Decreasing life insurance is designed to cover financial commitments that reduce over time.

You’ll take out a decreasing term life insurance policy for a set number of years, called the ’term’. Your payments can be either annual or monthly.
The amount your policy pays out gets smaller over time, usually each month or year. By the end of the policy, it will have reduced to zero.

This means your loved ones would get a larger payout if you died near the start of the policy than if you died closer to the end.

How much does decreasing term life insurance cost?

People who search for cover through us are typically quoted around:

£37²

per month

But the price you’ll pay depends on various things, including:

Your age
Your height and weight
Your lifestyle – including how much you drink or if you smoke
Your medical history
How long you want the policy to last
How much you want the policy to pay out.

²Based on 51% of customers who compared quotes for this type of policy in September 2026.

What are the pros and cons of decreasing term life insurance?

There are several advantages to taking out decreasing term life insurance. But whether it’s the right level and type of cover for you will depend on your personal circumstances.

Pros of decreasing term life insurance

Cheaper to buy - monthly payments are often lower than level term insurance. Decreasing term insurance typically costs £12 less per month than level term insurance, according to our data³.
Protect your mortgage - decreasing term life insurance is a popular type of life policy with people who have a repayment mortgage. The amount paid out should go down roughly at the same rate as the amount left on your mortgage.
Payments usually stay the same - your payments are usually the same throughout the policy. Check your cover to confirm.
Support for loved ones - the payout could help your loved ones pay off your mortgage or other debts they could be responsible for if you die.
Extra benefits - some life insurance policies come with added benefits such as health helplines.

Cons of decreasing term life insurance

Won’t work with an interest-only mortgage - The payout from the policy reduces each year. So it wouldn’t be enough to pay off the mortgage balance, which stays the same throughout the whole mortgage term.
Drop in value - A decreasing term policy will pay out less as time passes. So, check the reduction rate to make sure that your life cover wouldn’t fall significantly faster than what you owe on your mortgage.
No payout when the policy finishes - If you live beyond the end of the plan, there’ll be no payout after the policy ends.

What other types of life cover should I consider?

Level term

The payout from a level term policy stays the same throughout the plan. Level term insurance:

Could be used by the people who rely on you financially to pay off a mortgage and to cover other expenses, such as funeral costs, if you die while the policy is running.
Is often more expensive than decreasing term cover.
Can be taken out to help protect your family’s lifestyle and pay for living expenses, sitting alongside a decreasing term policy that covers your mortgage.
Could also be helpful extra cover if you’ll finish paying your mortgage before your children or other family members stop relying on you. You don’t have to pick the same term for both policies.

Death in service

If you’re working it’s worth checking whether you have death in service benefit through your employer. Death in service cover:

Will pay out to your beneficiaries if you die while working for the company.
Is often based on a multiple of your salary. This may not be enough to support your family.

If that’s the case, you should probably still think about life insurance.

Also, if you change jobs, you’ll lose your death in service benefit and life insurance might be more expensive to buy as you’ll be older.

Joint life insurance

Joint life insurance covers two people on one policy.

It’s usually cheaper, but will pay out only once. So the remaining person would have to take a new policy out at that point.
Two people on a joint policy typically pay less than £48 a month for decreasing term cover, while a single policy for one person costs up to £28².

What’s the difference between level term and decreasing term life insurance?

The main differences are how the payout works, who each type suits, and what it typically costs.

Decreasing term	Level term
- Payout: gets smaller over time, roughly in line with a repayment mortgage - Can be suitable for: people with a repayment mortgage whose loved ones can cover other expenses - Typical cost: around £37 per month²	- Payout: stays the same for the whole policy - Can be suitable for: covering household bills, funeral costs and living expenses. It could also pay off your mortgage, depending on the amount of cover you choose - Typical cost: less than £49 per month²

Decreasing term

Level term

- Payout: gets smaller over time, roughly in line with a repayment mortgage

- Can be suitable for: people with a repayment mortgage whose loved ones can cover other expenses

- Typical cost: around £37 per month²

- Payout: stays the same for the whole policy

- Can be suitable for: covering household bills, funeral costs and living expenses. It could also pay off your mortgage, depending on the amount of cover you choose

- Typical cost: less than £49 per month²

How do I compare decreasing term life insurance quotes?

Compare decreasing term life insurance quotes in four steps:

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Answer a few questions about yourself and your health.

Choose your cover

Say how much cover you want and for how long. Not sure? Our life insurance calculator can help you work out how much you need.

Compare your quotes

See quotes from our providers, plus optional extras such as critical illness cover.

Choose your policy

Pick the cover that suits you. Check the policy details, including how your cover reduces over time, before you buy.

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What our expert says...

“Fixed-rate mortgage deals often last between two and five years, so you may remortgage several times before paying off your home loan. And if your interest rate goes up when you remortgage, you may not pay off your balance as quickly as originally planned.

"Whenever you remortgage, move home or change your mortgage term, check your life insurance payout is still reducing at roughly the same pace as your mortgage. Otherwise, your family could face a shortfall.”

Tim Knighton, Life, health and income protection insurance expert

FAQs

Do I have to take out decreasing term life insurance if I have a mortgage?

Strictly speaking, you don’t need any kind of life cover when you take out a mortgage. However, some mortgage lenders may require it.

But some type of life insurance could be a sensible option if you have people who depend on you to pay the mortgage. Imagine if something happened to you and your family could no longer afford to stay in their home, for example.

Can I get decreasing life insurance with critical illness cover?

Yes, you can add critical illness cover to your decreasing term life insurance. Critical illness cover could pay out a cash sum if you’re diagnosed with an illness or serious condition listed in your policy documents. This can include:

A heart attack
Stroke
Several types of cancer.

What counts as a critical illness varies between providers, so check the policy documents.

It’s usually cheaper to add critical illness cover to decreasing term life insurance the younger you are. 25 to 34-year-olds typically pay less than £45 per month, while 45 to 54-year-olds pay less than £88².

What term should I choose for decreasing term life insurance?

Many people choose a term that matches the time left on their mortgage, so the cover ends when the mortgage is due to be paid off.

If you want cover for longer, for example while children still rely on you, you could look at a level term policy. A longer term usually costs more.

What happens to my decreasing term cover if I pay off my mortgage early?

Your cover continues until the end of the term unless you cancel it.

If you cancel, your cover and payments stop but you won’t be refunded anything you’ve paid for the policy.

Can I keep my decreasing term life insurance if I remortgage or move home?

Your policy is separate from your mortgage, so remortgaging, switch lenders or moving doesn’t automatically cancel or change your cover. Bear in mind that if your new mortgage is bigger or runs for longer, your cover might not be enough or might end too soon.

Read more: Mortgage life insurance

Can I get decreasing term life insurance if I have a health condition?

It’s possible to get life insurance with a pre-existing condition, but this depends on your condition and the provider. For example, you might be:

Offered cover at a higher price
Offered cover that doesn’t include certain conditions
Declined cover.

Answer every health question fully and honestly, as incorrect answers could affect a future claim.

Does the payout go straight to my mortgage lender?

No, the payout normally goes to your estate or the people named on the policy, who can then choose to pay off the mortgage.

How the policy is set up, for example whether it’s written in trust, can affect who gets the money and how quickly.

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Reviewed 27 Oct 2026 byTim KnightonLife, health and income protection insurance expert

Tim Knighton is an expert in building and managing relationships with big brands for the benefit of customers, with more than 20 years of experience. He seeks out the right products that look after you and those you love most during the toughest times.

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¹Based on Trustpilot ratings (October 2026).