Mortgage Protection Life Insurance

Learn about decreasing term life insurance and how it works

What is Mortgage Protection Life Insurance?

Mortgage Protection or Decreasing Term life insurance is a policy where your cover amount goes down or ‘decreases’ over time which in turn lowers the monthly premiums throughout the duration of the policy. This means that your premiums decrease - the price you pay doesn’t increase and will only go down as the policy progresses.

If you don’t die before the mortgage protection policy ends and you want to stay covered, you will need to take out another life insurance policy.

Why should I choose Mortgage Protection Life Insurance?

A Mortgage Protection policy does what it says on the tin – it simply provides financial cover for your mortgage in the event that you pass away before you finish paying it off. This means that your loved ones won’t be left reeling in the wake of trying to continue paying the mortgage off and instead have peace of mind that the mortgage is taken care of.

Mortgage Protection policies tend to be cheaper than Level Term and are suitable for those looking to cover their mortgages. It’s usually a requirement by the bank or building society providing the mortgage service that you have some form of life insurance in place before the mortgage starts, and a decreasing term life insurance policy is suitable for this. This ensures that the agreement with the mortgage lender is settled, meaning your family don’t have to worry about paying the mortgage themselves.

What are the benefits of Mortgage Protection cover?

As the policy decreases throughout, this means that the sum assured decreases along with the monthly premiums. This means you’ll pay less and less for your life insurance cover, and it won’t increase as time goes on.

Sometimes decreasing term policies are used by those who don’t have a mortgage but want to still provide some financial aid for their families if they were to pass away during the policy.

Are there any considerations with a Decreasing Term policy?

A Decreasing Term policy isn’t particularly suitable for those with an interest-only repayment mortgage, due to the capital debt being repaid when the mortgage term comes to an end.

A Level Term policy may be more suitable if you’re looking to cover more than the costs of your mortgage and means you could leave a lump sum for your loved ones.

Decreasing term policies do not cover you for life – if you don’t want to limit the period of time which you’re covered for, a Whole of Life policy might be worth looking into.

You can purchase a decreasing term policy for yourself or for you and a partner – known as a single or joint policy respectively. A consideration with a joint decreasing term policy is that when either of the two holders of the policy die, the other person will not be covered by the joint policy any longer and will require a new policy to make sure they’re protected. Bearing this in mind, it may be more beneficial to set up two single decreasing term policies - ensuring that no matter what happens, both partners are protected.

Typically, protection plans have no cash-in value and cover will cease at the end of the term, or if premiums are not maintained.

What affects the cost of a Decreasing Term policy?

As with all life insurance policies, your health, age and lifestyle will influence your monthly premiums and how much an insurer is willing to cover you for. Factors like smoking, height and weight, a history of illnesses and more will contribute towards how big a risk you are to an insurer. Another factor that’s often not thought about by people applying for life insurance is how your occupation can affect your cover – if you’re someone who works at great heights every day, you’re going to be deemed ‘riskier’ than someone who has an office job.

You can find out more information by visiting our High-Risk Factors page.

How do I get Decreasing Term Life Insurance?

Taking out a Decreasing Term policy with Protect Line couldn’t be simpler. Use our online quote comparison service to find a selection of Decreasing Term policy options – just select ‘My Home’ when choosing what you wish to protect. Remember, the online quotes we provide are based on perfect health and lifestyle and may not reflect the actual price of your life insurance.

Alternatively, you can call us directly at 0333 880 3030 or request a call-back and we’ll give you a ring at a time that suits you. We’re a non-advisory service, so whilst we can’t offer you any advice, we can answer your questions with facts, not our opinions.