Cover that steps down as your mortgage does.
The short answer
Decreasing term life insurance pays a lump sum if the insured person dies during the term, but the amount falls over time, roughly in line with a repayment mortgage. Because the insurer’s risk shrinks each year, it usually costs less than level cover. It is designed to clear a mortgage, not to leave extra money for a family.
Who this cover may suit
- You have a capital repayment mortgage and want the balance cleared if you die.
- You want the lowest-cost way to protect a specific falling debt.
- You already have separate cover or savings for your family’s living costs.
- Your lender or broker has recommended protecting the mortgage.
When to consider another option
- Your mortgage is interest-only — the balance does not fall, so level cover is usually a better match.
- You also want money for your family’s living costs — add a level layer or look at family income cover.
- Your interest rate could rise sharply — check the policy’s assumed rate against your mortgage.
How it works
Tell us about you
A few simple questions about your age, health and what you want to protect.
Choose amount and term
Pick how much cover you want, its shape and how long it should last.
Review real options
See options based on your answers, with a real person to help if you want one.
How decreasing term cover works
You set the starting sum assured to your mortgage balance and the term to the mortgage term. Each year the potential payout reduces, following a schedule based on an assumed interest rate. If you die during the term, the insurer pays the amount due at that point. MoneyHelper sets out how mortgage-linked life cover differs from other types. [2] Read our life insurance and your mortgage guide for lender requirements, and our term life insurance page for the other shapes of cover.
| Decreasing term | Level term | |
|---|---|---|
| Payout over time | Falls each year | Stays the same |
| Best matched to | Repayment mortgage | Interest-only mortgage, family income |
| Relative cost | Usually lower | Usually higher |
| Money left for family | Usually little beyond the mortgage | Any amount above the debt |
| Risk to watch | Mortgage falling more slowly than assumed | Inflation eroding the fixed sum |
The assumed interest rate
Every decreasing policy reduces on a set schedule tied to an interest rate chosen by the insurer. If your mortgage rate is higher than that assumption, your real balance will fall more slowly than your cover — leaving a shortfall. Check the assumed rate before you buy, and review cover when you remortgage. The ONS publishes inflation and price data that help explain why rates move. [9]
A couple protecting a repayment mortgage
Fictional example: Tom and Aisha, both 31, a £240,000 repayment mortgage over 30 years and no children yet. No prices are shown because real premiums depend on underwriting.
- Mortgage cover
- Decreasing, starting at £240,000 over 30 years
- Family cover
- None yet — to be added when they start a family
- Check
- Policy’s assumed rate compared with their mortgage rate
- Trust
- Each policy placed in trust for the other partner
The mortgage would be cleared if either died. They plan to add level family cover later — see our first-time buyers guide.
Trusts and the payout
Decreasing cover can still be written in trust. Without one, a payout joins the estate and may count towards Inheritance Tax above £325,000. [4] HMRC’s guidance explains how trusts are taxed. [5] See our trusts guide.
Decreasing term at a glance
What works well
- Usually the lowest-cost way to protect a repayment mortgage.
- Premiums normally fixed for the term.
- Matches a debt that genuinely shrinks.
What to watch
- Leaves little or nothing extra for family.
- May fall faster than your real mortgage.
- Not suitable for interest-only loans.
What happens if I overpay or repay my mortgage early?
Decreasing cover reduces on a fixed schedule that is set when you take out the policy, based on an assumed interest rate and mortgage term, not on your actual mortgage balance day to day. If you overpay your mortgage, switch to a shorter remaining term, or your interest rate falls, your real debt can shrink faster than the policy’s schedule — which is not a problem for a claim, but may mean you are paying for more cover than your mortgage needs in later years. MoneyHelper’s guidance on life insurance recommends reviewing protection whenever your mortgage changes materially. [2] If you extend your mortgage term or borrow more instead, check that your existing policy still reaches the new end date.
Can decreasing term life insurance be a joint policy?
Yes. Couples who share a repayment mortgage often take out a joint decreasing policy on a first-death basis, so the single payout clears the mortgage whichever partner dies first, after which the policy ends. Some couples choose two single decreasing policies instead, so the survivor keeps their own cover afterwards. Our joint life insurance page compares joint and single cover in more detail.
| Decreasing term | Family Income Benefit | |
|---|---|---|
| How it pays | A falling lump sum tracking the mortgage | Regular income-style payments until the term ends |
| Best suited to | A repayment mortgage | Replacing part of a household income |
| Cost pattern | Usually lower, falls with the shrinking risk | Depends on the income amount and term chosen |
| If a claim happens early in the term | Pays the higher, early-term amount | Pays the full remaining income stream |
Reviewing decreasing cover after overpaying the mortgage
Fictional example: Ben and Sara, both 44, originally took decreasing cover scheduled over 25 years against a £200,000 mortgage. Ten years in, overpayments mean their balance and remaining term are both lower than planned. No prices are shown because real premiums depend on underwriting.
- Original policy
- Decreasing cover scheduled over 25 years from outset
- Mortgage today
- Overpayments mean the balance is lower and the remaining term shorter than planned
- Options considered
- Keep the existing policy as extra protection, or reduce cover to match the new balance
- Decision
- Kept the policy unchanged, since it still matches or exceeds the outstanding balance
Their mortgage stays fully protected, and the review highlighted that cover should be checked whenever a mortgage is overpaid or restructured.
The FCA’s market study into pure protection found that competition generally works well, while noting many households remain underinsured. [3] Answer every application question accurately: under the Consumer Insurance (Disclosure and Representations) Act 2012 you must take reasonable care not to misrepresent. [6]
Employer death-in-service cover is valuable, but MoneyHelper notes it usually ends when you leave the job. [7] If a claim is ever disputed, the Financial Ombudsman Service handles complaints about insurers free of charge. [8]
Keep exploring
- Life insurance and your mortgage: what cover do you need?
- Level, decreasing and increasing term cover compared
- Life insurance for first-time buyers: protecting the new mortgage
- How much does term life insurance cost in the UK?
- Mortgage life insurance
- Level term life insurance
- Joint life insurance
- Term life insurance
Frequently asked questions
What is decreasing term life insurance?
Decreasing term life insurance is a policy where the potential payout falls over the term, usually to mirror a capital repayment mortgage as the balance is paid off. If the insured person dies during the term, the insurer pays the amount due at that point in the schedule. Because the amount the insurer might have to pay shrinks each year, premiums are usually lower than for level cover of the same starting amount. If the insured person survives the term, the cover ends and nothing is paid back.
Is decreasing term life insurance worth it?
It can be good value if your main aim is to clear a repayment mortgage and you have other ways to support your family. It is usually the lowest-cost way to protect that specific debt. It is less useful if you want money left over for living costs, childcare or education, because the payout is designed to track the loan rather than your wider needs. Many families pair a decreasing mortgage layer with a smaller level policy for the household, which our mortgage guide explains in more detail.
What happens if my mortgage rate is higher than the policy assumes?
Decreasing policies reduce on a fixed schedule based on an interest rate the insurer assumes. If your actual mortgage rate is higher, your real balance falls more slowly than your cover, so a claim could leave part of the mortgage unpaid. The gap is usually small early on but can grow. To manage this, compare the assumed rate with your mortgage rate before you buy, choose a slightly higher starting sum if needed, and review your cover whenever you remortgage or change your borrowing.
Can I use decreasing cover for an interest-only mortgage?
It is not usually a good fit. With an interest-only mortgage you only pay the interest each month, so the full balance stays owed until the end of the term. A decreasing policy would pay less and less while the debt stayed the same, leaving a growing shortfall. Level term cover is the more common match for interest-only borrowing. If you have a part-and-part mortgage, you can split cover: decreasing for the repayment part and level for the interest-only part.
Is decreasing cover the same as mortgage life insurance?
Often, yes. When people say mortgage life insurance they usually mean decreasing term cover set up to match a repayment mortgage. But mortgage protection can also mean level cover for an interest-only loan, or even income-based products that pay the monthly mortgage payments if you are ill or lose your job, which are different. When comparing options, check exactly what the policy pays, when and to whom, rather than relying on the product name. Our mortgage life insurance page explains the choices.
Should I put decreasing term cover in trust?
It is worth considering even for mortgage cover. A trust can let the payout go directly to your chosen beneficiaries, such as a surviving partner, who can then clear the mortgage without waiting for probate. Without a trust, the money usually forms part of your estate and may count towards Inheritance Tax above the £325,000 threshold. Joint policies are often not placed in trust, so check the options with the insurer. Our trusts guide sets out the main choices and questions to ask.
What happens to decreasing term cover if I overpay my mortgage?
Decreasing term cover reduces on a fixed schedule that is set when you take out the policy, based on an assumed interest rate and mortgage term, not on your actual mortgage balance from day to day. If you overpay your mortgage, switch to a shorter remaining term, or your interest rate falls, your real debt can shrink faster than the policy’s schedule. This is not a problem if you need to claim, because the policy will still pay at least the scheduled amount; it simply means you may end up with more cover than your mortgage balance requires in later years. MoneyHelper’s guidance on life insurance recommends reviewing protection whenever your mortgage changes materially. The more important risk runs the other way: if you extend your mortgage term or borrow more, check that your existing decreasing policy still reaches the new end date and covers the new balance, topping up or replacing it if it does not.
Can decreasing term life insurance be a joint policy?
Yes, decreasing term life insurance can be taken out as a joint policy, and this is a common choice for couples who share a repayment mortgage. A joint first-death decreasing policy pays out once, when the first of the two people dies within the term, with the sum assured following the same falling schedule as a single decreasing policy. The payout is designed to clear the remaining mortgage balance, after which the policy ends completely, leaving the surviving partner without that cover going forward. Some couples choose two single decreasing policies instead, which cost somewhat more combined but mean the survivor keeps their own cover in place after a claim. Many households also add a separate level policy alongside a joint decreasing policy, so the family still has income protection after the mortgage is cleared. Comparing the two structures against your own mortgage and family circumstances is worth doing before you apply.
Sources
- Association of British Insurers — Protection insurers pay out £7.84 billion in claims in 2025 (2026-06-29)
- MoneyHelper — What is life insurance? (2026-09-28)
- Financial Conduct Authority — MS24/1.5 Market Study into the Distribution of Pure Protection Insurance Products: Final Report (2026-09-21)
- GOV.UK — How Inheritance Tax works: thresholds, rules and allowances (2026-09-28)
- HM Revenue & Customs — Trusts and Inheritance Tax (2010-11-08)
- legislation.gov.uk — Consumer Insurance (Disclosure and Representations) Act 2012 (2012-03-08)
- MoneyHelper — Life insurance through work (2026-09-28)
- Financial Ombudsman Service — Complain about a financial business (2026-09-28)
- Office for National Statistics — Inflation and price indices (2026-09-17)
- GOV.UK — Bereavement Support Payment (2026-09-28)