Most of us take life insurance at some point to protect our loved ones in the event of our death. Unfortunately, when we die our debts remain and in addition to the distress of bereavement a grieving family might easily be saddled with money-worries too.
In most cases a mortgage lender will insist of life cover to cover the debt secured on the property. In addition, you might decide that you want to leave a lump sum to cover for expenses in the immediate months or years after your death.
Of course, as life moves on you might find that your mortgage sum is reducing or your liabilities have decreased. Perhaps you have built up savings and reduced debt, thus making the need for insurance redundant? Therefore, rather than insuring for a fixed lump sum throughout the term of your cover, some people agree a reducing insured sum, either linked to the mortgage sum outstanding or perhaps linked to family events such as the graduation of your children or the repayment of outstanding loans.
A Level Term policy is a fixed sum throughout the term. A Decreasing Term is, as the name suggests, allows for a varying sum insured to take account for events such as the ones mentioned above.
The advantage to a decreasing Term Insurance is primarily reduced premiums. The insurer’s exposure to risk is reduced and this is reflected in the premiums you must pay.
Of course, when considering life insurance, it is also worth considering terminal critical illness cover and family income benefits insurance. You should also review what other cover might be in place already including death-in-service insurance provided as a perk by some employers.
At Mortgage Required we believe that protecting your property, possessions and loved ones is essential. Having the correct cover in place gives both peace of mind and security should the worst happen. Find out more about our protection services here.
Contact Mortgage Required to speak to an protection adviser on 01628 507477.
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