Decreasing term life insurance is often used to help protect a repayment mortgage. The amount insured is designed to reduce during the policy term, broadly alongside an assumed repayment mortgage balance. You pay the premiums specified in your policy, and a valid claim during the term pays the benefit applicable at the time of death.
Use the mortgage balance illustration below to understand why the amount of cover may fall over time. This is not a life insurance premium calculator: it estimates a hypothetical mortgage balance and does not reproduce an insurer's benefit schedule. For a personalised life insurance quotation, start the mortgage protection enquiry.
Decreasing life insurance calculator: mortgage illustration
Illustrative mortgage calculation
How much might your mortgage balance reduce?
Change the figures to see an estimated repayment mortgage balance. Interest is held constant for the calculation.
Illustrative mortgage balance after years
£0
This is a modelled loan balance, not the value of an insurance policy or an insurance quote.
Enter a loan amount, mortgage term, assumed interest rate and a point during the mortgage. The illustration assumes regular monthly repayments and a constant rate; actual mortgages can differ. An insurer's reducing life benefit may be calculated differently from this example.
How does decreasing term life insurance work?
With a level term policy, the insured benefit normally stays the same for the duration selected. With decreasing term cover, the insured amount reduces over time. This can make it a cost-effective way to protect certain repayment mortgages, but only where the reduction pattern broadly matches the debt you are trying to cover. It is worth comparing level term life insurance and decreasing term protection before deciding.
Does the life insurance balance match the mortgage exactly?
Not necessarily. Mortgage interest rates can change, you might make overpayments or take payment holidays, and you may change your borrowing. A decreasing insurance policy usually follows a schedule set by the insurer, rather than tracking your live mortgage account. Check the policy's assumed interest rate and reducing cover table, particularly if the mortgage rate, amount or term changes.
Decreasing or level life insurance: which may suit you?
- A repayment mortgage: decreasing cover may suit the part of the mortgage expected to fall over time.
- An interest-only mortgage: level cover may make more sense where the capital remains outstanding until the end.
- Family income or other expenses: separate level or income-based protection may be appropriate where the need does not fall in the same pattern as a mortgage.
- Critical illness benefits: if included, check which medical conditions meet the insurer's definitions and how the benefit is structured. Do not assume it covers all illnesses.
How much decreasing term cover should I request?
Start by checking the amount and term of the borrowing you want to protect. You may also need to consider your partner's financial position, other existing insurance, debts and childcare needs. The how much life cover do I need? guide helps work through those questions.
How much does decreasing life insurance cost?
Insurer premiums depend on factors including your age, health, nicotine use, occupation, the amount of cover, policy term and any additional benefits. A quote may change following underwriting. There is no single monthly price that works for every borrower, and the mortgage illustration above cannot estimate what an insurer will charge.
Request a personalised decreasing-term or mortgage life insurance quote and our advisers can review your requirements. We work with a wide panel of UK insurers. You can also read our mortgage life insurance guide and what happens when the mortgage is repaid?
Discount Life Cover is a trading style of FCA-authorised My Key Finance Ltd (FRN 628996). The calculation is an illustrative mortgage estimate, not a recommendation or policy illustration.