Level term life insurance vs decreasing term life insurance
Summary: Level term life insurance provides the same amount of cover for the full length of your policy whereas cover on a decreasing term policy will reduce in value over time.
Contents
We offer two types of cover
At Beagle Street, we offer two types of cover: level cover and decreasing cover. Both are term insurance policies, meaning they protect your loved ones for a fixed amount of time.
Both types of policy have their own benefits and the type of cover you need depends on what you are looking to protect and how much you would like to pay each month.
Level term cover
Level term life insurance pays out a fixed amount of money upon death that never goes down. This means you know exactly how much your loved ones would receive if you were to pass away.
The payout and premiums are decided at the start of the policy and never change, so you can be sure about your premiums in life and how much your family will receive in death.
Level term life insurance can be used to cover fixed costs like household bills, mortgage repayments, loans, and any extra cash.
Example of level term life insurance
- You take out a policy with cover of £100,000
- The length of your policy term is 25 years
- If you die during your 25-year policy term your loved ones will receive a lump sum pay out of £100,000
Decreasing term cover
Decreasing term life insurance is a policy designed to cover large debts such as a mortgage. The amount of cover decreases over the course of the policy as you pay your mortgage off and this debt therefore decreases.
These policies are more affordable than level term policies but can still ensure your families biggest assets are protected.
At Beagle Street, our decreasing term life insurance decreases monthly in line with an annual interest rate of 6%, regardless of what your mortgage interest rate is. So, if your mortgage interest rate is less than 6% then our decreasing term cover could help your family clear your outstanding debt if you died.
Which policy is right for you?
| Level term life insurance | Decreasing term life insurance |
|---|---|
| The amount you’re covered for stays the same throughout your policy term | The amount you’re covered for decreases over time |
| The monthly cost of your policy stays the same | The monthly cost of your policy stays the same |
| Monthly premiums could be more expensive | Monthly premiums could be cheaper because your cash payout decreases over time |
| Peace of mind knowing how much could be paid out to your loved ones if you die | Peace of mind knowing your loved ones could get a payout if you die |
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