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.

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).

Age restrictions

  • 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).

Premiums

  • Guaranteed
  • 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.

Benefits automatically included at no extra cost

Other information

  • For joint life policies, benefit is paid on the first death.
  • Policies can be placed in trust.