Decreasing Term Life Insurance
A Decreasing Term Life Insurance policy will provide you with cover for a certain length of time, known as a term. The policy will then pay out a lump sum should you die at some point during this term. It is important to note that this lump sum will decrease during the term of the policy and will be nil at the end of this period. However, the monthly premium that you pay will stay the same over the term of the policy.
This type of policy is most commonly used to cover a mortgage or a loan in which the amount that you owe will decrease over time.
As with most forms of life insurance, the premiums are dependent on the sum insured, the term of cover, age, gender and if you smoke. If you wish you may also be able to add additional cover such as critical illness.
Advantages
- Allows you to leave a sum of money to your family to help pay off a mortgage or loan and provide financial security.
- Often cheaper than term life insurance.
Disadvantages
- The policy will only pay out should you die during the term.
- If you outlive the term of the policy you will not receive any money.