Decreasing Life Insurance
A plan designed to help protect a repayment mortgage. It pays out the amount of cover if the life assured dies or is diagnosed with a terminal illness during the term of the plan. The amount of cover decreases over the term of the plan.
Premiums are guaranteed.
Amount of Cover
- No minimum sum assured. Driven by minimum premium.
- No set maximum sum assured - subject to negotiation with re-insurers, except if Critical Illness Cover or Critical Illness Extra are chosen, when the maximum amount of cover limits will be:
£3 million - if Specific Work Tasks definition is chosen under TPD, or
£2 million - if Own Occupation definition is chosen under TPD.
- The amount of cover decreases roughly in line with the way a repayment mortgage reduces during the policy term.
- The minimum term allowed is 5 years.
- The maximum term allowed is 50 years (or 40 years if Critical Illness Cover or Critical Illness Extra are chosen).
- The minimum age to take out a policy is 18. It is possible for a life of another policy to be taken out on a 17 year by an adult with insurable interest. This policy can then be placed in an Absolute trust with the 17 year as the beneficiary.
- The minimum age at the end of the policy is 29.
- The maximum age for buying a policy is 74 (or 64 if Critical Illness Cover or Critical Illness Extra are chosen).
- The policy must by their 90th birthday (or 70th birthday if Critical Illness Cover or Critical Illness Extra are chosen).
- Choice of guaranteed or reviewable premiums if Life Insurance with Critical Illness Cover or Critical Illness Extra is chosen.
- Payable monthly or annually by Direct Debit.
Options available at an additional cost
Benefits automatically included at no extra cost
- For joint life policies, benefit is paid on the first death.
- Policies can be placed in trust.