Decreasing term life assurance

Burnley_Lad

We took out a decreasing term life assurance policy in 2008, designed to pay off the mortgage if one of us dies.

We haven't looked at the policy schedule for many years until this weekend, where we noticed that the schedule lists an amount that is considerably more for this month's date than the actual outstanding balance of our mortgage.

What would cause this discrepancy?  I suspect it's because of historically low interest rates in recent times.

tacpot12

It might well because you have bene paying a lower rate of interest on the mortgage than the life policy assumed. I would suggest that you do nothing about this discrepancy. If one of you dies, the excess will pass to the survivor,  who will almost certainly find it useful while they are greiving for their loss.  

dunstonh

What would cause this discrepancy?  I suspect it's because of historically low interest rates in recent times.

Decreasing term assurances decline each year on the basis of an assumed interest rate.     Usually closer to the historical rates or even double digit rates to play it safe.    So, a discrepancy would be expected.

Burnley_Lad

Thanks both.