Good reasons to buy
Pay off the home
Choose a payout to match your mortgage
Terminal illness cover
Included at no extra cost
Lower monthly payments
Decreasing payout means less costs
Sometimes known as mortgage life insurance, Decreasing Cover refers to the fact that the payout amount falls each year. By the end of the term, the amount falls to zero. That’s why it’s generally used to help pay off a repayment mortgage, a debt that reduces as it’s being paid off to zero, when you own your home. So when taking out a policy, you could set the cover amount and the term of the policy to match the loan amount and length of your mortgage.
Ours reduces in line with a repayment mortgage with a fixed interest rate of 7%. The idea being that there’s always just enough cover to pay off the mortgage, if you die during the term of the policy.
As long as your interest rate is not greater than 7%, if a claim is made during the policy term, any outstanding repayments on your mortgage or loan should be covered.
Who is it for?
For anyone buying a property using a mortgage, Decreasing Cover can help cover the loan. The way it works makes it particularly suitable for protecting a repayment mortgage, or indeed any other loan that you’re repaying over time.
While the payout amount of Decreasing Cover decreases over time, the monthly payments are fixed, but normally less than level cover life insurance payments. So this type of insurance is good to consider if you are on a tight budget.
Another reason that you may choose this type of policy is that you think your dependents may not need such a large payout as the years go by. For example, if they are grown up and financially independent, they will not need as much of a large payment.
Frequently asked questions
What is Life Insurance Decreasing Cover?
Our Decreasing Cover pays out a single amount that reduces over the term of the policy. Although payments stay the same over the term of the policy, how much you pay each month is typically less than for level term life insurance. Its decreasing cover falls roughly in line with the reducing balance on a repayment mortgage. So you can use it to cover a repayment mortgage or any other loan that gradually gets repaid.
Who can apply?
UK residents aged between 18 and 70. Our Decreasing Cover is not available to members of the Armed Forces or reservists.
How much cover can I have?
You can have Decreasing Cover up to £500,000 and a total of £500,000 across all life insurance policies you have with us.
Will I need to provide medical information?
You’ll only need to answer a few simple health questions when you apply. We don’t need proof from your doctor and we won’t ask for any. So be as accurate as you can – if your family need to claim in the future this could save them a lot of heartbreak if the claim was denied.
How long does cover last?
You specify how long you want the cover to last for when you apply for the policy. The term can be as little as five years or as long as 50 years, but the cover must end by age 80.
When does cover begin?
You will have an instant decision on whether you are eligible for a policy. If you are eligible and you wish to go ahead, you will be covered straight away.
Is terminal illness cover included?
Yes. A Decreasing Cover policy pays out on diagnosis of an illness that has no cure or cannot be cured and which is expected to lead to death within 12 months.
How long do I need to make payments for?
You’ll need to keep making monthly payments throughout the period of cover, unless you die or a terminal illness diagnosis that meets our definition has been confirmed. You can stop making your payments at any time. If you do, your cover will end and you won't get anything back.
Will my payments go up in the future?
No. We’ll never increase your monthly payments.
Can I reduce my monthly payments?
Yes, you can reduce the payment at any time to any amount, down to £7 a month. If you choose to reduce your payment your cover amount will also reduce. If you have Serious Illness Benefit you may not be able to reduce your monthly payments to £7 a month. This is because the cost of Serious Illness Benefit is worked out separately, even though we take both payments at once.
What if I miss a payment?
Not to worry. Just make sure to pay the full amount within 60 days of the missed payment date and you’ll be fine. If you don’t pay in that time, we’ll have to cancel your policy right after the 60th day. You won’t get a refund, won’t have cover anymore and won’t be able to restart the policy.
What if I stop paying?
If you stop making your monthly payments then your cover will stop. It is worth remembering that you won’t get any money back, as this is a life insurance policy and not a savings plan. So you can’t cash in your cover at any time.
What if I change my mind?
If you cancel your policy within 30 days, we will refund any premiums you have paid. If you cancel your policy at any other time, your cover will stop and you won’t get anything back.
Can I take out additional cover?
You cannot increase cover under your existing policy; however, you can apply for a new policy. Acceptance is subject to completion of our application process. Any additional policy taken out will be subject to the terms and conditions applicable to that policy at the time it is taken out. Also, your partner can apply for a policy too – as long as they’re eligible for cover.
Who does the payout go to?
Your life insurance payout will be made to your estate and settled in accordance with your wishes laid out in your will or as directed by your personal representative(s). If you need more information or advice on making a will you can refer to the Money Advice Service.
How do my family claim?
Please call us and our trained staff will deal with the claim with kindness and sympathy. Please call our UK based call centre on our dedicated claims line:
0345 266 5400
Mon to Fri: 8am–7pm. Sat: 9am–5pm. Sun: 10am–4pm.
Or they can post to:
PO Box 409
Royal London House
To make it easier for your family at a difficult time, please keep your policy documents safe and let your next of kin know where to find them.
How quickly will you pay out?
We realise that it may be a difficult time when a claim is being made, so we’ll deal with the claim as quickly as we can. Once we’ve received all the information we need, we will make payment within 10 working days.
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