Decreasing and increasing term assurance
Life cover for a decreasing or increasing sum assured but fixed premium and term
An increasing term assurance policy is life cover for a fixed term, such as 10, 20, 30 years. The sum assured (the amount payable
as a result of a successful claim) will increase through the term of the policy but the premium is
fixed throughout the term of the policy. The policy is written for the amount the sum assured will grow to by the policy end. The
increases are made annually.
An decreasing term assurance policy is life cover for a fixed term, such as 10, 20, 30 years. The sum assured (the amount payable
as a result of a successful claim) will decrease through the term of the policy but the premium is
fixed throughout the term of the policy. The policy is written for the amount the sum assured will start at at the start of the policy. The
decreases are made annually.
The balance of the sum assured becomes payable upon death to the beneficiary.
Many insurance providers allow for a joint policy where the policy will payout on first OR second death (will only pay out once). You
decide which death you want it to pay out on at the outset.
There is no surrender value to these policies. If you stop paying the premiums the life protection stops. At the policy termination date
the policy terminates without value.
Acceptance of these types of policies are subject to age, lifestyle and health.
Such policies are used for a decreasing liability for a fixed term, such as an
repayment only mortgage or for an increasing liability such as inheritance tax.