What is Decreasing Term Assurance?
There are two main types of mortgage:
- The repayment mortgage. We suggest a decreasing term life assurance policy (see below).
- An interest only mortgage. We suggest a level term assurance policy.
Decreasing Term Assurance (to cover a loan) is a form of Mortgage Protection
Decreasing Term Assurance Product Features:
- Fixed term of years selected to match your mortgage.
- Sum assured decreased to reflect the outstanding loan amount each year.
- Sum assured is paid out on death during the policy term.
- No benefit on survival.
- No surrender value.
- Level premiums throughout the term of the policy.
Reducing Term Life Assurance Policy Benefits:
- Low cost protection cover used in conjunction with a repayment mortgage.
- Cover can be purchased with or without critical illness cover.
- Normally includes terminal illness benefit as part of the standard policy.
- Accepted by most major lenders as suitable cover for your mortgage.
- Cover reduces to match the outstanding mortgage amount. Ideal for re payment mortgages or loans.
- Premiums guaranteed not to increase from acceptance for the policy term.
Reducing Term Cover Policy Limitation:
- You may want to extend the term, but this is not possible.
- You may be ill at the end of the plan and be unable to obtain further cover.
- No investment element.
- The reducing sum assured will not take account of inflation.
- If you increase your mortgage you will need to affect a new policy to cover the extra borrowing.