Life Insurance Basics: Level Term And Decreasing Options Explained

Level term and decreasing life insurance are two types of life insurance policies that are designed to protect your loved ones financially if you pass away. The main difference between the two is that level term policies have a fixed payout amount for the length of the policy, while the payout on a decreasing policy reduces over time. Level term cover can help pay everyday living costs, childcare, or an interest-only mortgage, while decreasing term insurance is often purchased to help clear a specific debt, such as a capital repayment mortgage. The monthly cost of both types of policies will remain the same for the duration, unless changes are made.

Level term life insurance can help pay for everyday living costs, childcare, or an interest-only mortgage

Level term life insurance is a type of financial protection for your loved ones if you pass away. It can be used to cover everyday living costs, such as groceries, bills, and rent. It can also help with childcare expenses, ensuring that your children are taken care of financially. Additionally, level term life insurance can be beneficial for those with an interest-only mortgage, where the balance needs to be repaid in full at the end of the mortgage term.

In contrast, decreasing life insurance is designed specifically to help protect a repayment mortgage. The amount of cover reduces over time, and the death benefit diminishes, typically in one-year increments. This type of insurance is often cheaper than level term life insurance because the cover decreases over the length of the policy.

While level term life insurance can provide financial support for a range of expenses, it's important to remember that these policies are not savings or investment products. They have no cash value unless a valid claim is made. Therefore, level term life insurance should be considered as a way to protect your loved ones financially and provide peace of mind, rather than as a means of accumulating wealth.

Decreasing life insurance is designed to protect a repayment mortgage

Level term and decreasing life insurance are both designed to protect your loved ones financially if you pass away. The main difference between the two is that level term policies have a fixed payout amount for the length of the policy, whereas the payout on a decreasing policy reduces over the length of the policy.

Level term policies have a fixed payout amount for the length of the policy

Level term life insurance and decreasing life insurance are both designed to protect your loved ones financially if you pass away. Level term policies have a fixed payout amount for the length of the policy, whereas the payout on a 'decreasing' policy reduces over the length of the policy. The monthly cost of both types of insurance will remain the same for the duration of the policy, unless you make any changes.

Level term life insurance is more expensive than decreasing life insurance because the amount of cover remains the same. Level term cover can help pay everyday living costs, childcare, or an interest-only mortgage – where the amount you owe stays the same, and the balance needs to be repaid when the mortgage ends.

Decreasing life insurance is designed specifically to help protect a repayment mortgage, rather than additional lifestyle expenditure. With a decreasing-term policy, the death benefit diminishes over time, typically in one-year increments. If you were to die during a fixed period (the term), the amount paid to your family would depend on how long has passed since the policy was taken out. If you were to die after this period, there would be no payout.

The payout on a decreasing policy reduces over the length of the policy

Both level term life insurance and decreasing life insurance are designed to protect your loved ones financially if you pass away. The main difference between the two is that level term policies have a fixed payout amount for the length of the policy, whereas the payout on a decreasing policy reduces over the length of the policy.

The monthly cost of both level term and decreasing life insurance will remain the same for the duration of the policy, unless you make any changes. However, the amount of cover you receive with a decreasing policy will reduce over time. This means that the longer you have the policy, the less money your family will receive if you die during the policy term. If you die after the policy term has ended, there will be no payout.

Decreasing life insurance is often cheaper than level term life insurance because of the reduction in cover over time. It is designed to help protect a repayment mortgage, rather than additional lifestyle expenditure. Decreasing cover is often purchased to help clear a specific debt, such as a capital repayment mortgage.

Level term and decreasing life insurance are designed to protect your loved ones financially if you pass away

Whether you choose level or decreasing life insurance, the monthly cost will remain the same for the duration of the policy, unless you make any changes. These products are not savings or investment products and have no cash value unless a valid claim is made. It’s worth remembering that you may not always see these policies described as ‘level term’ or ‘decreasing term’. For example, Legal & General simply calls its level term policy 'Life Insurance', while its decreasing term policy is called 'Decreasing Life Insurance'.

Decreasing life insurance is designed specifically to help protect a repayment mortgage, rather than additional lifestyle expenditure, so it’s likely to be cheaper than level term life insurance because the amount of cover reduces.

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