📊 Level vs Decreasing Cover: What’s the Difference?

Life cover comes in two main types:

1. Level Term Cover

• You choose a fixed payout amount (e.g. £100,000)
• That amount stays the same for the entire policy
• Ideal for replacing income, covering future family needs, or fixed debts

📌 Example:
Tom wants to make sure his family has £150,000 if he dies. He takes out level term cover for 25 years. If he dies during that time, the payout is £150,000.

2. Decreasing Term Cover

• The payout amount reduces over time
• Matches a repayment mortgage that reduces over the years
• Cheaper than level cover

📌 Example:
Sarah has a £200,000 repayment mortgage over 25 years. She takes decreasing term cover to match. If she dies early in the term, her payout is higher. Later, it reduces with the mortgage.

➕ Riders and Add-ons

You can also add riders to customise your policy. These include:

• Waiver of premium: Stops you paying if you become ill or disabled
• Income protection: Pays monthly income if you can’t work
• Fracture cover or hospitalisation cover (some providers)

✅ Be sure you need them , they cost more, and may not be essential.

📉 When to Reduce or Cancel Your Cover

Life changes , and your life insurance should too.

Here’s when it might make sense to cut back or cancel your policy:

✅ You’ve paid off your mortgage

• If your policy was designed to cover the loan, and it’s now cleared, you may not need the cover anymore (especially if it’s decreasing cover).

✅ Your children are financially independent

• If your kids are grown up and no longer depend on you, your insurance needs may be lower.

✅ You have enough savings

• If you’ve built a strong financial safety net, your loved ones may not need a payout.

✅ You’re retiring and no longer have big outgoings

• Once major costs like childcare and mortgage are gone, you may want to scale down.

⚠️ But don’t cancel too soon. Many policies become more expensive or unavailable as you age or if your health changes.

Tip: Instead of cancelling, consider:

• Reducing your cover amount
• Shortening your term
• Switching to a cheaper policy

📞 Always speak to your provider or a broker before cancelling.

🚫 Common Exclusions in Life and Illness Cover

Even with a policy, your claim could be rejected if:

❌ You weren’t honest on your application

• Not telling the insurer about medical history, smoking, or high-risk jobs can void your cover.

❌ You die within the first year

• Some policies have a 12-month exclusion (especially for suicide)

❌ Pre-existing conditions

• These are usually excluded unless specifically agreed

❌ You don’t meet the exact illness definition

• Critical illness cover only pays if your condition matches their criteria

Always check:

• The key facts document (summary of terms)
• Exclusion list
• Time limits and definitions of illness

✅ Ask for help if you’re unsure , small print matters.

 

🧭 How to Choose the Right Life Insurance Cover

Here’s what to consider when choosing or updating your policy:

🔹 How much do you need?

• Add up your mortgage, debts, family living costs, education plans

🔹 How long do you need cover for?

• Until your mortgage ends?
• Until your children are independent?
• For life?

🔹 Do you want to cover illness too?

• Consider a combined life + critical illness or life + serious illness plan

🔹 How much can you afford?

• A lower cover amount is better than none at all

🔹 Joint or single cover?

• Couples can share one policy (cheaper) or take individual ones (more flexible)