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What does “Decreasing Term Insurance” mean?

With Decreasing Term Insurance the sum insured reduces steadily from the sum insured at the commencement of the policy, down to nil immediately before the policy comes to the end of its term. So, for example, if the policyholder died half way through the policy’s term, the policy would pay out half the initial sum insured.

Incidentally, “Decreasing Term Insurance” is just another name for “Decreasing Life Insurance”. There are one and the same.

Decreasing Term Insurance is the most commonly used to insure the capital outstanding on a repayment mortgage. In this context it is sold under the name of Mortgage Life Insurance with the added proviso that any pay out goes directly to the mortgage provider. (For more information about Mortgage life Insurance click here: What does Mortgage Life Insurance do?) But Decreasing Term Insurance can also be purchased in its own right where you simply want the sum insured to reduce down to nil by the end of the policy.

Term Insurance is also available with “Level cover”. (For further information about Level insurance cover click here: What does “Level Term Insurance” mean?)

It is important to realise that Term/Life Insurance policies never have any investment value. If you want an insurance policy that does have an investment value, you want Life Assurance. (Click here for information about Life Assurance: What is the difference between Life Assurance and Life Insurance?)

Please be aware that these notes are brief and are not designed to be comprehensive. But we hope they have proved useful.

Mortgages

Questions we get asked about Life Assurance

What is the difference between Life Assurance and Life Insurance? | What is a Whole of Life policy? | When might I want Life Assurance as opposed to Life Insurance? | What are the alternatives to Life Assurance? | How can I cash in my Life Assurance policy? | How can I buy a Life Assurance policy?

Questions we get asked about Life Insurance and other protection insurance

Why are life insurance prices so low on the Internet? | What is the difference between a Life Insurance Company and a Life Insurance Broker? | Can I get a Quote now online? | Is the quoted price the same as the price I get charged? | What is a “Rated” policy? | Can Life Insurance cover be arranged quickly? | What does Life Insurance do? | What is the difference between a Reviewable and a Guaranteed policy? | What are the most common optional extras available on life insurance policies? | What does “Term Insurance” mean? | What does “Level Term” insurance mean? | What does “Decreasing Term” insurance mean? | What does Mortgage Life Insurance do? | What does Mortgage Payment Protection Insurance do? | What does Family Income Benefit Insurance do? | What does Income Protection Insurance do? | What does Critical illness Insurance do? | What does Terminal Illness Insurance do? | How does age affect premiums? - Will my premiums increase over time? | Will my medical history influence my premium? | Do I need a medical? | Are smokers charged more? | Are there any extras to pay? | If I die, how is a claim made? | Is a UK Life Insurance policy valid if I work abroad?