Which life insurance?

What’s the difference between level and decreasing term life insurance?

None of us want to think about a time when we’re no longer around, but when it comes to managing your finances and protecting your family, a little forward planning is unavoidable. With this in mind, it’s well worth considering taking out life insurance policies. This cover can give you added peace of mind that if the worst should happen, your loved ones will at least benefit from some extra financial support.

The most basic type of life insurance is term cover, which pays out if you die within a specified period of time. However, things aren’t quite that simple. There are different forms of term insurance, and two of the most popular are level and decreasing term. This brief guide explains the differences between these options.

Level term

Level term policies pay out a lump sum if you die within the agreed term of your policy. This amount stays the same throughout the entire length of your term and the premiums typically remain even too. These products can be useful if you want to leave a set amount of money for your family to live on after you pass away. They can also be good if you’re covering an interest-only mortgage and you don’t have an endowment policy to cover it.


Decreasing term

In contrast, the lump sums paid out by decreasing term insurance policies get smaller over time throughout the course of your agreement. In other words, the further into the term you are, the less money your family will receive if you die. These products can be a good option if you want to cover a debt that is reducing in size over time, like a repayment mortgage. One of the major benefits of these policies is the fact that they can be considerably cheaper than level-term insurance.

Still unsure?

Consider your options, and seek advice if necessary

Because of the importance of life insurance, it’s vital that you make the right choice. So, before you sign up to any particular policy, make sure you do your research and check your options. Also, take a careful look at the terms and conditions of any policies you are considering. Meanwhile, if you’re not sure which option is best for you and your family, you might benefit from seeking help from an expert who can talk you through your options and offer impartial advice.

Choosing the right life insurance product may take a little time, but once you have this policy in place, you can feel confident that your family will be protected in the event of your death.

Are you covered?

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