The least expensive of the Term Assurances, Decreasing Term Assurance does what it says on the label. The level of benefit decreases as the term of the policy runs; the premiums do not however reduce. The premiums are fixed throughout the policy term, and the premium level is lower than that of Level Term Assurance as a result of the decreasing benefit. This type of life assurance is commonly used to protect Capital & Repayment mortgage debt.
Typically the policy reduces the protection assuming a Mortgage Interest Rate of 10%. Many are paying mortgage interest at around 5% and, providing interest rates do not go over 10%, the benefit should reduce slower than the mortgage debt, ensuring repayment of the mortgage debt in full. However, there is no guarantee that the level of cover will match the outstanding debt upon a claim.
Provides a lump sum on death or terminal illness which can be used to cover outstanding repayments on a mortgage or loan
The level of cover reduces each year - in line with the sum you owe
If you die within the term of the policy, it will pay out a lump sum, to help clear whatever is outstanding on your debt at that point, however, there is no guarantee that the lump sum paid will enable you to clear your outstanding debt in full
Please be aware that in some cases this type of assurance is based on an assessment of the health of the applicant.
Decreasing Term Assurance
The least expensive of the Term Assurances, Decreasing Term Assurance does what it says on the label. The level of benefit decreases as the term of the policy runs; the premiums do not however reduce. The premiums are fixed throughout the policy term, and the premium level is lower than that of Level Term Assurance as a result of the decreasing benefit. This type of life assurance is commonly used to protect Capital & Repayment mortgage debt.
Typically the policy reduces the protection assuming a Mortgage Interest Rate of 10%. Many are paying mortgage interest at around 5% and, providing interest rates do not go over 10%, the benefit should reduce slower than the mortgage debt, ensuring repayment of the mortgage debt in full. However, there is no guarantee that the level of cover will match the outstanding debt upon a claim.
Provides a lump sum on death or terminal illness which can be used to cover outstanding repayments on a mortgage or loan
The level of cover reduces each year - in line with the sum you owe
If you die within the term of the policy, it will pay out a lump sum, to help clear whatever is outstanding on your debt at that point, however, there is no guarantee that the lump sum paid will enable you to clear your outstanding debt in full
Please be aware that in some cases this type of assurance is based on an assessment of the health of the applicant.
Pedr Financial Planning is an appointed representative of TenetConnect, which is authorised and regulated by the Financial Conduct Authority. TenetConnect is entered on the Financial Services Register (www.FCA.org.uk) under reference 149826. Registered office: 20 High Street, Lampeter, Ceredigion, Wales, SA48 7BG. Registered in England & Wales: 07048010.
The Financial Ombudsman Service is available to mediate individual complaints that clients and financial services businesses aren't able to resolve themselves. To contact the Financial Ombudsman Service please visit: http://www.financial-ombudsman.org.uk/contact/index.html
The guidance provided within this website is subject to the UK regulatory regime and is therefore primarily targeted at consumers based in the UK.
