Independent Wealth Management

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Decreasing Term Assurance – Think Again.

If you have a repayment mortgage, it is quite likely that you protected your mortgage with a decreasing term assurance policy.

This type of plan provides protection over the term of your mortgage, with the level of cover reducing in line with your decreasing mortgage liability.

The advantage of decreasing cover, as opposed to level cover, is simply that the cost is lower.

However, this approach could turn out to be a bit short sighted and not necessarily the best type of plan for you, so please read on.

If you ever move home or restructure your mortgage, your decreasing term policy is very likely to not match your new protection needs fully.  This is because a decreasing term policy is specifically set up to match the size and term of your mortgage.  You will be more or less forced to take out a new plan, which is likely to be more expensive due to your increased age.  If you have become an increased risk due to ill health or other lifestyle factors, your new policy could be very expensive.  At worse, you could even find that you are uninsurable.  The one thing decreasing term assurance does not do is to plan for changes in your circumstances.

Perhaps you should really consider a level term assurance policy.  This will initially cost more, but when you restructure your mortgage you will have the ability to continue your plan and satisfy your new protection needs.

A Professional Wealthcare client has recently taken out a one million pound level term policy to cover both his mortgage and his family.  This plan will cost him just over £128.00 per month and is unlikely to ever become redundant.  This is a man who really wants to look after his family, rather than simply cover his mortgage.  Does this describe you?  If so, please contact us for some proper, un-blinkered, forward looking financial advice.

The content of this post does not constitute advice and should not be taken as a recommendation to purchase or invest in any of the products mentioned. Before making any decisions, we suggest you seek advice from a professional financial adviser.

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Barry has provided both personal and professional advice to me since 2002, he has always been clear in his advice and recommendations and helped me to navigate the inevitable financial changes in our requirements. If you can’t see the wood for the trees, Barry can.

Mark Watson

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