Decreasing or level?

stuarta99

We've currently got life insurance and critical illness that was setup when we took out our mortgage on level term which is now around 50k more than our current mortgage.

I'm currently reviewing what we have and replacing an outdated mppi with income protection for both of us and want to review the life insurance policy.

Is it best to keep it on level term or change it to decreasing? Having a rough look on comparison sites, if we were to switch to a new level term based on the lower figure, it would cost us an extra £10/month. Or if we switch to a decreasing on the same lower figure we could save £10/month.

Not sure what the 'norm' or general consensus is with life insurance as I've never really got my head into it.  It seems as though the term left is also the term of our mortgage so will end when that does and so what happens then?

Many thanks

dunstonh

Is it best to keep it on level term or change it to decreasing?

Match the financial need.

Not sure what the 'norm' or general consensus is with life insurance as I've never really got my head into it.

The norm is to match the need.

It seems as though the term left is also the term of our mortgage so will end when that does and so what happens then?

They both end.   Happy days as no mortgage and you are still alive.

tacpot12

"Matching the need" is fair advice but you really need to consider ALL your needs. Decreasing term insurance is ONLY of use to clear the mortgage, but Level Term insurance that pays out £50k more than the mortgage could be very much useful and needed in the event that one of you dies. 

Life Insurance is generally cheaper the younger you are, so changing to a new provider rarely saves money, unless you are prepared to accept left cover. If I were in your position I would not change it. (I only took out level insurance policies when I had mortgages, I always declined the Decreasing Term offer.)

dunstonh

"Matching the need" is fair advice but you really need to consider ALL your needs. Decreasing term insurance is ONLY of use to clear the mortgage, but Level Term insurance that pays out £50k more than the mortgage could be very much useful and needed in the event that one of you dies. 

Perhaps it would be clearer if need become needs.   In which case, you get multiple policies or policy segments to fit each need.

policy segment A for mortgage, B for income replacement, C for pension replacement, D for other debts.

stuarta99

Ok thanks guys. It looks like we have an offer of saving £4/month if we switch to a decreasing based on our current mortgage if £118k plus some extras of GP service which wifey isn't interested in. Or we keep paying as we are at the £166k

stuarta99

For information we've kept with our existing Level Term as it seemed the better option for only £4 difference