Decreasing Term Mortgage Life Insurance pays out a cash lump sum to repay your mortgage should you pass away. The amount insured is designed to fall alongside a repayment mortgage, reaching zero just like the loan balance by the end of the policy term.
Should you die within the term of the policy this cover pays out a lump sum that can be used repay the mortgage loan.
Most leading Life Assurance policies will also pay out early if you are diagnosed with less than 12 months to live by a medical practitioner.
This option also enables the plan to pay out if you were to suffer any one of the conditions named in the policy terms, which usually includes cancer, heart attacks and strokes.
Critical conditions covered typically number around 40, but there are policies which will cover fewer than 10 conditions and those which will cover more than 100, so read your policy terms carefully.
As the chances of suffering a critical illness is far higher than death it often makes sense to consider adding this option to your policy.
The purpose of Decreasing Mortgage Life Cover is to protect a principal repayment mortgage.
The amount of cover falls over time to match your decreasing mortgage liability. The policy assumes an interest rate – providing this equals your mortgage interest rate, the cover will decline in step with your debt.
As the amount of cover you receive from your policy falls over time to reflect the amount of mortgage debt outstanding, costs are typically lower than if you were applying for a policy with a level benefit where the risk to the insurer remains constant over time.
We’ve used our Life Expectancy Calculator below to determine the risk of death for a healthy male of three different ages over the course of a 25 year mortgage term.
Generally speaking, the public at large underestimates the risk of passing away by a considerable margin.
According to our Health and Protection Survey, the public believes their risk of death to be SIX TIMES lower than reality.
What’s more, according to another Drewberry survey, a quarter of UK adults would have a mortgage of more than £100,000 to repay tomorrow if their income suddenly stopped, either through death or illness.
As such, given the risk is greater than many people assume, it can pay to have Mortgage Life Insurance to protect your home and loved ones should the worst happen.
1 in 33
1 in 15
1 in 6
Life Insurance is not usually costly; this said, there are still some features of your cover that you may be able to adjust to reduce your policy’s premiums. You can find out how much your policy might cost by using our Mortgage Protection Insurance Calculator.
In the below table, we’ve highlighted the cost of a £250,000 Decreasing Mortgage Life Insurance policy which runs for 25 years. The individual is a healthy office worker of three different ages.
Prices were collected on April 8th, 2019, and represent the cheapest premiums from across the entire UK market.
|30 Years Old||£6.77||£11.49|
|40 Years Old||£11.92||£22.64|
|50 Years Old||£27.71||£64.78|
The best Mortgage Life Insurance for your needs will depend on your individual circumstances. It’s usually something that’s best discussed with your adviser to ensure you take out the most appropriate cover for you.
However, you can compare the top 10 UK Life Insurance companies below. Included in the table are links through to a more thorough review page for each insurer mentioned.
Aegon’s Scotland-based UK operations are wholly owned and operated by Dutch insurer Aegon N.V.
US insurance giant American International Group, Inc. (AIG) was first founded in 1919 and since then has grown to operate on a global scale. It provides a range of protection products for both individuals and businesses.
Aviva was founded in 1797, but the Aviva brand as it is today was formed in 2000 by the merger of Norwich Union and CGU PLC.
Guardian is a relaunched protection brand with a number of unique features to its policies.
L&G was formed as an insurance company for lawyers, by lawyers in 1836. It has since grown to become one of the country’s best-known financial services companies
LV is the UK’s largest friendly society, with more than 5.8 million customers, 1.1 million of whom are members.
Royal London previously operated Scottish Provident and Bright Grey as separate brands providing Critical Illness Insurance under the Royal London umbrella. From 2016, both were merged into the main Royal London brand.
Founded in 1812, Scottish Widows is today part of Lloyds Banking Group.
Vitality entered the UK market in 2007 with a joint venture with PruHealth and PruProtect, part of the Prudential Group. It has since bought out Prudential and is now branded solely as Vitality.
Zurich is a Swiss-based global insurance giant, operating in more than 170 countries. It employs around 55,000 employees worldwide, including 4,500 in the UK.
If you would like some more information or need help finding and comparing Decreasing Term Life Insurance quotes, please do not hesitate to get in touch.
We started Drewberry because we were tired of being treated like a number and not getting the service we all deserve when it comes to things as important as protecting our health and our finances. Below are just a few reasons why it makes sense to let us help.
We are here to make your life easier by providing you with all of the information you need to decide for yourself on the right policy.
Please don’t hesitate to pop us a call on 02084327333 or email firstname.lastname@example.org.
Director at Drewberry
Martyn Coates from Drewberry provided an excellent service with prompt handling of any question that we asked him. I would highly recommend Drewberry for anyone wanting Insurance.