We have all heard the term “a house is a home” but imagine the worst was to happen. You pass away leaving your partner without your income and being forced to sell the house where you raised your children.
A lot of people often ask what a Decreasing Term Life Insurance policy (often known as a Mortgage Protection Life Insurance policy) is, how it works and why you would choose this type of policy over a Level Term policy.
Firstly a Decreasing Term policy will do exactly as the title implies: the sum that you are insured for will decrease over the term of the policy. This is a type of policy that is typically used to cover an amount outstanding on your mortgage or any other debt that you will pay off over time.
Many mortgage providers will require that you have mortgage protection life insurance in place before you are accepted for the loan, so that if the worst was to happen and you pass away, the outstanding balance can be paid.
Another reason that you would take out a decreasing term policy is for a type of protection called a Gift Inter Vivos policy. This is a type of plan that will actually decrease at the same rate as the chargeable inheritance tax on your estate as a result of a Potentially Exempt Transfer.
The way this works is that if you were to pass on a gift (e.g. a house) and pass away within 7 years of this transaction, the receiver would have to pay inheritance tax on some of the gift. The Gift Inter Vivos Policy will cover the full level of inheritance tax that would need to be paid in year one and then decrease over the next 7 years protecting your gift.
To get a better understanding of our process and to obtain a Mortgage Protection Life Insurance quote, simply visit Get a Quote, or give us a call.
Let us do the hard work and find the best deals for you
Call our UK Team