Level Term vs Decreasing Term Insurance

Level term insurance provides a fixed death benefit and premium throughout the policy, making it ideal for family income replacement. Conversely, decreasing term insurance reduces its coverage over time in line with outstanding liabilities (like mortgages), offering a more affordable option specifically for debt protection.

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What is Level Term Life Insurance?

Definition of Level Term Life Insurance

Level term life insurance cover that has a specified amount of time and offers a fixed sum assured. That means that if you pass away during the term of the policy, your family will receive a payout, ensuring that they are financially secure during difficult times.

Benefits:

And your family could use this payout to:

Can help you pay off mortgage and other loans
Offer coverage for funeral cost
Can help in paying children's education fees and other bills
Can cover everyday expenses

Term Plans

₹1
Crore

Life Cover

@ Starting from ₹ 13/day⁺

₹50
LAKH

Life Cover

@ Starting from ₹ 8/day⁺

₹75
LAKH

Life Cover

@ Starting from ₹ 12/day⁺

What is Decreasing Term Life Insurance?

Definition of Decreasing Term Life Insurance

Decreasing Term Life Insurance is also known as 'mortgage insurance'. This policy is usually used to pay off a mortgage. This life insurance policy covers a certain time; however, the payout decreases over time as per the amount of your mortgage. This is why decreasing life insurance is a popular and cost-effective way to pay your mortgage.

Benefits:

Here is how this payout can help you:

Helps you in repayment of mortgage
Protects family living costs
Offers an inheritance
This cover also provides financial assistance to help pay for funeral expenses.

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

What is the Main Difference Between Level Term and Decreasing Term Life Insurance?

The table below provides key differences and a few similarities between the two polices.

Level Term Life Insurance	Decreasing Term Life Insurance
Cover lasts for a set term, usually up to 40 years	Cover lasts for a set term, usually up to 40 years
The payout amount stays the same throughout the policy	The payout amount reduces over time
Often used to help protect an interest-only mortgage	Often used to help protect a repayment mortgage
Usually costs more than decreasing term cover	Usually one of the more affordable types of life insurance
Pays out if you pass away during the policy term	Pays out if you pass away during the policy term
Monthly premiums usually stay fixed	Monthly premiums usually stay fixed
Terminal illness cover is often included at no extra cost	Terminal illness cover is often included at no extra cost
Critical illness cover can usually be added for an extra cost	Critical illness cover can usually be added for an extra cost
Can be written in trust to help reduce inheritance tax	Can be written in trust to help reduce inheritance tax

Also read: what is term life insurance for NRI

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Which Type of Term Insurance is Right For You?

The best option depends on your requirements and what you want your policy to cover.

If you wish to give your family a fixed payout to cover their household expenses, children's care costs or a payout to cover other debts, level term life insurance is a good choice. With this policy the payout will remain the same, which will offer financial protection for your family's well-being.

Decreasing Term Life Insurance is suitable for those who want to cover their mortgage repayments, as this payout will help in decreasing over time and is usually more affordable.

It is important to think about your expenses, debts and loans and then choose a suitable policy that will ensure financial support for you and your family’s future.

It is also possible to get both policies if they meet your requirements and budget.

Did You Know?
You can also buy level term insurance and decreasing life insurance online. Purchasing life insurance can assist you in getting an appropriate policy and also offers support in the application process.

Can A Critical Illness Cover Be Added to Level and Decreasing Term Plans?

Yes, you can usually add critical illness protection to level term life insurance and declining term life insurance for an extra fee. It may pay a lump payment if you are diagnosed with a severe sickness.

The money may be used for private medical care, home expenditures or lost earnings if you are unable to work.

This is unlike terminal illness protection, which is commonly offered with term life insurance at no additional cost. Terminal illness protection If you’re diagnosed with a life-threatening condition and have been given 12 months or less to live, terminal illness cover lets you make an early claim.

Read about the best term insurance plans in India.

Wrapping It Up!

Choosing between level term insurance and decreasing term life insurance is based on your needs and the type of financial protection you want to offer your family. Both level term insurance and decreasing life insurance can offer good financial protection and stability for your loved ones.

FAQ's

Q: What is level-term life insurance in the UK?

A: The family life insurance in UK also called the level term life insurance, gives the fixed sum assured during the policy term.
Q: What happens when my level term expires?

A: If your term life policy expires while you are still alive, then your insurance company will inform you that your coverage has ended and you do not have to pay premiums any further.
Q: Can I cancel decreasing term life insurance?

A: Yes, a decreasing life insurance policy can be cancelled at any time.
Q: Does a decreasing term have a level premium?

A: Yes, many decreasing-term life policies have level premiums. Which means you have to pay the same amount for the term of the policy.
Q. Can I Get Joint Level Term Insurance and Decreasing Term Life Insurance?

Yes, it is possible to get both level term insurance and decreasing term life insurance together as a joint policy. A Joint life insurance policy is generally a cheaper option for couples who want to secure their future financially. However, this policy has a single payout that automatically terminates the policy term.
Q. Is decreasing term life insurance worth it?

A. Decreasing term life insurance can be worthwhile for covering reducing debts, such as mortgages, at a lower premium cost.
Q. Does decreasing term have a level premium?

A. Yes, most decreasing term insurance plans have fixed premiums throughout the policy term, even as coverage gradually decreases.
Q. What is the difference between term insurance and level term insurance?

A. Term insurance is a broad category, while level term insurance provides a fixed death benefit throughout the policy term.

˜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

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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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