Decreasing term life insurance is a cost-effective way to ensure your loved ones won’t be left with financial burdens if you pass away before your mortgage or loan is paid off. It is specifically designed for homeowners with repayment mortgages, in which the amount owed decreases over time. As your mortgage balance decreases, so does the cover amount, keeping your premiums lower than many other life insurance options.
At Connect Mortgages, we help you find policies that match your budget, your mortgage, and your peace of mind.
What Is Decreasing Term Life Insurance?
Decreasing term life insurance pays out a cash lump sum if you die during the policy term. Unlike level term life insurance, where the cover stays the same throughout, decreasing cover reduces each year, typically in line with your outstanding mortgage or loan balance.
This makes it an ideal choice for:
- Homeowners with repayment mortgages
- Individuals with personal loans or business borrowing that reduces over time
- People looking for lower-cost life insurance with targeted financial protection
It’s important to know that if you’re on an interest-only mortgage, this policy may not be suitable. In that case, level term life insurance may be more appropriate, as it keeps the payout constant for the entire policy term.
How Does It Work?
You choose the amount of cover you need and how long the policy should last, usually matching the term of your mortgage. The policy value decreases each year in line with your mortgage balance, but your monthly premium stays the same. If you die during the term, your insurer pays out the current cover amount, which can be used to clear your remaining mortgage.
This ensures your family can keep the home without worrying about how to repay the debt.
Why Choose Decreasing Term Life Insurance?
- Lower Premiums: Because the cover reduces over time, premiums are generally lower than for level cover.
- Tailored to Mortgages: Works well alongside capital repayment mortgages, offering protection that matches your financial obligations.
- Peace of Mind: If you pass away before the end of your mortgage term, the policy can help your loved ones remain financially secure.
- Optional Add-ons: Some providers offer critical illness cover for an additional premium.
If you’re unsure which life cover suits you, our team is here to help you compare different life insurance options based on your needs.
Mortgage Protection and Compliance You Can Trust
At Connect Mortgages, we’re fully FCA regulated and specialise in mortgage and protection advice tailored to your circumstances. We will never recommend a product that isn’t right for you, and our recommendations are always made in line with current mortgage compliance regulations and industry best practices.
All conversations are confidential, and you’ll always speak to a qualified UK-based adviser, not a chatbot or call centre.
We understand that every mortgage and every life is different, which is why our advice is always personal, transparent, and obligation-free.
Compare Policies with Connect Mortgages
We work with leading UK insurers and mortgage lenders to ensure you receive competitive quotes for decreasing term life insurance that aligns with your repayment mortgage. Whether you’re a first-time buyer or remortgaging, we’ll help you find a policy that offers the right protection at the right price.
Already have life insurance? Speak to our team to see if you’re overpaying or underinsured. We offer free policy reviews.
Speak to a life insurance adviser or call 01708 676111 today.
Let’s Protect What Matters
Your mortgage is likely your biggest financial commitment. Let’s protect it properly. At Connect Mortgages, we’re here to make sure you and your loved ones are protected—now and into the future.
Start with a free, no-obligation consultation today.
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FAQ | Decreasing Term Life Insurance
Can I cancel my decreasing term life policy?
Yes, you can cancel at any time, although you won’t get a refund of premiums already paid.
Does the payout go directly to my mortgage lender?
Not automatically. The lump sum is paid to your beneficiaries, who can choose to use it to pay off the mortgage.
What if I live past the policy term?
If you outlive the policy, no payout is made. That’s why it’s important to match the policy length to your mortgage term.
Can I get joint cover?
Yes, decreasing term life insurance is available as a single or joint policy. In joint policies, the cover typically pays out on the first death.
Does decreasing cover affect my premiums?
No, your premiums stay fixed throughout the term, even though the cover amount reduces each year.
Is medical underwriting required for this insurance?
It depends on the insurer, your health, and the level of cover requested. Some policies may require a medical exam or health questionnaire.
Can I add critical illness cover to my decreasing term policy?
Yes, many insurers offer critical illness cover as an optional add-on, which may increase your premiums but provide broader protection.
What happens if I miss a payment?
If you miss a premium payment, your policy could lapse after a grace period. Contact your insurer immediately if you’re struggling to pay.
Who should consider decreasing term life insurance?
It’s best suited to people with repayment mortgages or loans that reduce over time. It provides peace of mind that the debt won’t pass on to loved ones.
Still have questions? Explore our full guide to life insurance or request a callback from our friendly team.
