There are two main types of policies: level term and decreasing term. The one that’s right for you depends on a few factors, including the type of mortgage you have. 

A level term policy is a popular way to cover interest-only mortgages, while a decreasing term policy is a popular way to cover repayment mortgages. 

Level term policy: A level term policy is by far the most popular type of life insurance cover in the UK. It lasts for a fixed length of time, such as 25 years, and will only pay out the agreed lump sum if you die during that period. If you live beyond the end of the term, the cover lapses and you receive nothing.

Decreasing term policy: Decreasing term life insurance (or mortgage term life insurance) also only pays out a lump sum if you die during the fixed cover period, but the payout amount gradually decreases over time and premiums are lower as a result. It’s usually taken out to cover a specific debt such as a repayment mortgage in the event of your death and so it tracks your loan term.

For more information, read our blog post about the different types of life insurance policies out there.

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