Simply put, with a level term life insurance policy, if you were to die within the term, your family will be paid the pre-agreed cash sum. For decreasing term, the cash sum reduces throughout the policy length, approximately in line with the decreases in a repayment mortgage.
What's best level term or decreasing term?
Due to the large pay out potential, level term life insurance is often best suited to protecting a repayment mortgage. Whereas a decreasing term life insurance is ideal for protecting a repayment mortgage as the sum assured can reduce in line with your remaining mortgage balance.
What does level term mean in life insurance?
Most term policies are actually level term, which means your premiums and death benefit stay the same for the entire length of the term. By contrast, with a yearly renewable term policy, your premiums can go up every year.
What is a decreasing term life insurance policy?
Decreasing term life insurance is a term life policy with a death benefit that gets smaller over time. It's beneficial if you expect your loved ones to gradually need less financial support as time passes.