Decreasing Term Assurance is a Life insurance policy where the amount of cover is designed to reduce in line with the balance on a Repayment (Capital & Interest) Mortgage, over a set ‘Term’.
If you have a Repayment mortgage, the mortgage balance is reducing as you make your repayments each month, as shown in the diagram below.
Please note the graph below is for illustrative purposes only.
The amount of cover within a Decreasing Term Assurance policy is designed to reduce at the same pace as the mortgage balance, which means that if death occurred during the term, the insurance policy will pay out enough to repay the outstanding mortgage.
Because the cover reduces each year, the cost of this cover is less than that of a Level Term Assurance policy. As you get older it costs more and more to provide life cover as the risk of you dying increases with age, it is therefore very sensible to effect Life cover at the time your mortgage starts.
Top tip: Depending on your age; the amount of cover and the term required, the cost of Decreasing Term Assurance is often less than you would think. As always, it pays to get advice from an expert, so do call one of our protection experts today to ensure you get the most suitable cover for your needs!! There is NO INITIAL FEE CHARGED for this advice from us, so please call 01271 346123.