What is Decreasing Term Life Insurance?

Decreasing term life insurance is a type of coverage created to protect mortgages and debts over time. Decreasing life insurance is a more affordable option for many people in the UK as the payout from this insurance policy declines over time in line with the mortgage amount.

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Table of Content

How Does Decreasing Life Insurance Work?
How is the Cost of A Decreasing Term Life Insurance Calculated?
What are the Advantages of Getting a Decreasing Term Life Insurance?
How Much Decreasing Term Life Insurance Do I Need?
What is a Decreasing Term Insurance Calculator?
Alternative Policies to Decreasing Term Life Insurance

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This policy ensures that your loved ones can repay the mortgage without any financial stress in case you die during the policy term. With that, a decreasing life insurance calculator can help you estimate the right level of your cover.

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@ Starting from ₹ 12/day⁺

How Does Decreasing Life Insurance Work?

A decreasing term life insurance policy is a policy that decreases the amount of payout over time, which is in line with the mortgage repayment. Many UK homeowners opt for this life insurance policy, as the cover decreases over time, it is a more affordable option for many people.

How does this insurance policy work?

This cover is for a fixed period of time up to 40 years
The policyholders must pay monthly premiums to keep the policy active.
In case the policyholder passes away during the policy term, a guaranteed payout is given to the family.
The amount of payout reduces with the payment of the mortgage
The decreasing life insurance policy ends when the policy term is finished.

Also read: what is term life insurance for NRI

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How is the Cost of A Decreasing Term Life Insurance Calculated?

Your decreasing term insurance premiums are calculated on the basis of your personal circumstances and the information that you will provide with your insurer.

Here are key factors that determine the cost of monthly premiums:

Your age is one of the most important factors in calculating the amount of premiums.
Policyholders' overall health and well-being are taken into consideration.
Lifestyle habits, including smoking and alcohol consumption, can increase the cost of a decreasing term life insurance policy.
What do you do for a living, and what is your position on the job.
The amount of sum assured you will choose with the policy term will be considered.

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What are the Advantages of Getting a Decreasing Term Life Insurance ?

Affordable: A decreasing term insurance policy is more affordable than other life insurance policies.
Mortgage Protection: A decreasing life insurance policy is the best for covering mortgage repayments, which also makes it a cost-effective policy as the payout reduces as the mortgage is paid off.
Joint-Cover Option: This life insurance policy can also be taken out on a joint basis.
Flexible Illness Cover: Policyholders have the option to choose coverage amount and policy term according to their needs.

Also read: How do UK Tax Laws Affect Term Life Insurance Plans?

How Much Decreasing Term Life Insurance Do I Need?

The amount of decreasing term life insurance that you need will often depend on your remaining mortgage balance and how much time is left on your mortgage term. Many customers choose diminishing-mortgage life insurance to correspond with the amount of their repaying mortgage.

For example, if you have £200,000 left to pay on your mortgage with 25 years to go, you’ll probably want a decreasing term insurance policy with at least £200,000 of protection for 25 years. Some individuals additionally take out additional protection to aid their family with home expenditures and living costs.

A decreasing-life insurance calculator will allow you to work out the optimum amount of protection, depending on your mortgage and monthly costs.

What is a Decreasing Term Insurance Calculator?

As a new buyer of decreasing term life insurance, you might find yourself uncertain about where to begin and how to determine the exact coverage amount. A decreasing life insurance calculator helps you estimate how much coverage you may need based on your financial needs.

Just enter the details of your mortgage, bills, loans and other expenses or debts, and the calculator will then give you an estimate of the coverage you need based on the details you shared.

Alternative Policies to Decreasing Term Life Insurance

Critical Illness Cover: Under this critical illness cover, a payout is made in a lump sum if the policyholder is diagnosed with a serious illness. The payout can be used by the family member to pay medical bills and other expenses.

Income Protection Cover: The income protection insurance provides a steady income in case you are no longer able to work due to injury or serious illness. This ensures that your family can meet their daily requirements and pay for expenses during tough times.

Life Insurance Policies: The payout under this policy is only given when the policyholder has passed away or is diagnosed with terminal illness.

Read about the best term insurance plans in India.

Wrapping It Up!

A decreasing term life insurance is a valuable option for homeowners looking for affordable mortgage protection. By choosing the right level of cover by using a decreasing life insurance calculator, you can find the best policy that suits your financial needs. Select a policy that protects your family's future and well-being.

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FAQs

Q: Can I add critical illness cover to my decreasing term life insurance?

Ans: Yes, you can get critical illness cover with decreasing life insurance to add extra protection in case of an emergency.
Q: How much does decreasing-term insurance decrease each year?

Ans: A decreasing term life insurance policy decreases at a fixed rate of 6-8% each year.
Q: What is a decreasing term life insurance policy used for?

Ans: A decreasing-term insurance policy is taken out to repay a mortgage or any other loan.
Q: What is an example of a decreasing term life insurance policy?

Ans: For example, a borrower takes a decreasing term insurance policy for ₹50 lakh for a period of 20 years to cover a house loan at the age of 35 years. The amount insured lowers every year by ₹2.5 lakh, ₹50 lakh in year 1, ₹47.5 lakh in year 2 and so on until it drops to ₹0 at the conclusion of the period.
Q: Can I cancel decreasing term insurance?

Ans: Yes, you have the option to cancel a decreasing life insurance policy anytime during the 30 day cool-off period.

˜The insurers/plans mentioned are arranged in order of highest to lowest Sum Assured(SA) offered by Policybazaar’s insurer partners offering term insurance plans on our platform, as per ‘first year premium of life insurers as at 31.03.2025 report’ published by IRDAI.

Policybazaar does not endorse, rate or recommend any particular insurer or insurance product offered by any insurer. For complete list of insurers in India refer to the IRDAI website www.irdai.gov.in

Rs. 400/month is starting price for a 1 crore term life insurance for an 18 year-old male, non-smoker, with no pre-existing diseases, cover upto 30 years of age, rounded off to nearest 10.

Rs. 400/month (Rs.13/day) is starting price for a 1 crore term life insurance for an 18 year-old male, non-smoker, with no pre-existing diseases, cover upto 30 years of age.

+Rs. 230 is starting price for a 50 lakhs term life insurance for an 18 year-old male, non-smoker, with no pre-existing diseases, cover upto 30 years of age, rounded off to nearest 10.

+Rs. 8/day is starting price for a 50 lakhs term life insurance for an 18 year-old male, non-smoker, with no pre-existing diseases, cover upto 30 years of age, rounded off to nearest 10.

+Rs. 12/day is starting price for a 75 lakhs term life insurance for an 18 year-old male, non-smoker, with no pre-existing diseases, cover upto 30 years of age, rounded off to nearest 10.

+Rs. 497/month is starting price for a 1.5 crore term life insurance for an 18 year-old male, non-smoker, with no pre-existing diseases, cover upto 30 years of age.

+Rs. 487/month is starting price for a 2 crore term life insurance for an 18 year-old male, non-smoker, with no pre-existing diseases, cover upto 30 years of age.

+Rs. 626/month is starting price for a 3 crore term life insurance for an 18 year-old male, non-smoker, with no pre-existing diseases, cover upto 30 years of age.

+Rs. 905/month is starting price for a 5 crore term life insurance for an 18 year-old male, non-smoker, with no pre-existing diseases, cover upto 30 years of age.

+Rs. ₹361/month is the starting price for a ₹1 crore loan cover with an 8% interest rate for an 18-year-old male, non-smoker, with no pre-existing diseases, loan tenure up to 20 years, rounded off to the nearest 10

+Rs. 1,267/month is starting price for a 7 crore term life insurance for an 18 year-old male, non-smoker, with no pre-existing diseases, cover upto 30 years of age.

*The full refund of premium is available on availing the one-time option of refund of premium. Total premium paid for policy (paid for add-ons) will be the special exit value, payable on availing the one-time option of refund of premium if you wish to completely exit the policy.

+Rs. 447/month is starting price for a 1 crore term life insurance for an (NRI) 18 year-old male, non-smoker, with no pre-existing diseases, cover upto 30 years of age.

+Rs.679/month is starting price for a 2 crore term life insurance for an (NRI) 18 year-old male, non-smoker, with no pre-existing diseases, cover upto 30 years of age.

+Rs. 910/month is starting price for a 3 crore term life insurance for an (NRI) 18 year-old male, non-smoker, with no pre-existing diseases, cover upto 30 years of age.

+Rs. 1,374/month is starting price for a 5 crore term life insurance for an (NRI) 18 year-old male, non-smoker, with no pre-existing diseases, cover upto 30 years of age.

+Rs. 1,924month is starting price for a 7 crore term life insurance for an (NRI) 18 year-old male, non-smoker, with no pre-existing diseases, cover upto 30 years of age.

Women

+Rs. 400/month is Starting price for a 1 crore term life insurance for an 18 year-old Female, non-smoker, with no pre-existing diseases, cover upto 30 years of age, rounded off to nearest 10.

Rs. 461/month is the starting price for a 1 crore term life insurance for an 24 year-old female, non-smoker, with no pre-existing diseases, cover upto 54 years of age.

1,642/month is the starting price for a 1 crore term life insurance for an 44 year-old female, non-smoker, with no pre-existing diseases, cover upto 74 years of age.

Prices offered by the insurer are as per the approved insurance plans | #All savings and online discounts are provided by insurers as per IRDAI approved insurance plans | Standard Terms and Conditions Apply | **Tax Benefits are subject to changes in tax laws.| Policybazaar Insurance Brokers Private Limited

We will respond in the first instance within 30 minutes of the customers contacting us. 30-minute claim support service is for the purpose of giving reasonable assistance to the policyholder in pursuance of the claim. Settlement of claim (including cashless claim) is the responsibility of the insurer as per policy terms and conditions. The 30-minute claim support is subject to our operations not being impacted by a system failure or force majeure event or for reasons beyond our control. For further details, 24x7 Claims Support Helpline can be reached out at 1800-258-5881

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Policybazaar Insurance Brokers Private Limited | CIN: U74999HR2014PTC053454 | Registered Office - Plot No.119, Sector - 44, Gurgaon, Haryana – 122001 | Registration No. 742, Valid till 09/06/2027, License category- Composite Broker Visitors are hereby informed that their information submitted on the website may be shared with insurers. Product information is authentic and solely based on the information received from the insurers.

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