Decreasing life insurance is an alternative to level term life insurance cover.
Level term life insurance pays out the same amount whether you die in year 1 or year 25 of your policy. This makes them good for ensuring you leave enough behind to support your loved ones should you pass away.
Decreasing term life insurance policies pay out less the further into your term you get. They tend to be taken out to cover mortgages, with the pay-out amount declining over time in line with the policyholder’s outstanding mortgage debt.
If you took out £100,000 of cover and died in year 5 of your term, your loved ones might get £95,000 as a pay-out. If you died in year 25, they might get £10,000. Decreasing term life insurance tends to be cheaper than level term life insurance.
If you only want it to cover your mortgage, then decreasing term may be for you. But if you want to cover a bit more and have a fixed lump sum, consider level term life insurance.