What is the difference between Level and Decreasing types of Life Insurance cover?
Level life insurance (also known at Term life insurance) is where the cover amount remains the same throughout the life of the insurance policy. For example, if you take out a policy with a cover of £200,000 over 50 years, then at the amount that would be payable in the event of the policy holder’s death in the 50 year period will be £200,000. This type of life insurance is ideal if you have no mortgage or large loans and want your loved ones to receive a guaranteed lump sum when you die. Decreasing life insurance (also known as Mortgage life insuranc) is where the cover amounts decreases thoughout the life of the insurance policy. This is because the cover amount is used to decrease the amount of outstanding mortgage and loans the policy holder owes. This policy ensures mortgages and loan are paid off in the event of the policy holders death so their loved one will not be left with the debt. Anything left over after repayment of debts will then be paid out as a lump sum.
