Decreasing Term Insurance

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Paying off a loan, mortgage or hire purchase agreement? If you are intending to commit to a long term financial agreement on a repayment basis Decreasing Term Life Insurance means that you can ensure the loan is repaid in the event of your death.

Decreasing Term Insurance - The Pros and Cons

Pros
If you need to pay off a mortgage or a loan and are happy that the policy runs for a specific period of time, decreasing term insurance could be for you. It is generally not used if you are trying to provide a sum of money to protect your family in the event of your death.
Cons
You will only receive benefit from this type plan in the event of the policy holders death. (Or diagnosis of critical illness if this option is selected)
This type of plan never acquires a value

Decreasing Term Insurance Explained
An amount of money known as the sum insured is paid in the event of the death of the policyholder. The benefit payable reduces each month generally in line with a mortgage or loan.

This cover is usually used for mortgages or other loans where the amount owed decreases yearly.
Decreasing Term Life Insurance never acquires a value and if the policy runs full term it will expire without paying any benefit.
Options:

• Critical Illness Plans: lump sum paid in the event of diagnosis of critical illnesses. Save money by combining term insurance with critical illness cover.
• Terminal Illness: lump sum paid early on diagnosis of a terminal illness, allowing you to make arrangements for your dependents whilst still alive.
• WOP or Waiver of Premium as it is know: Pays the premiums on your life policy should you be unable to work due to ill health for a lengthy period. (generally specified on the quote and key facts)
• Guaranteed Premiums: As the name suggests the premium is guaranteed not to increase during the term of the policy. Sometimes a little more expensive but still a worthwhile option.
• Reviewable premiums often guaranteed for an initial five year period may be cheaper in the short term can work out more expensive over the lifetime of a policy.