Level vs Decreasing Life Insurance: What’s the Difference?

Life insurance is one of those things we all know we should sort out but it often gets pushed down the to-do list. Like a dull household chore, it’s easy to put off.

If you’ve started looking into life insurance, you’ve probably come across two common options: level and decreasing cover. They might sound similar, but they’re designed for very different purposes.

Here’s a simple breakdown to help you understand the difference.

Level Life Insurance

Level life insurance is the most straightforward type of cover. You choose a fixed amount—say £200,000—and that’s exactly what would be paid out to your loved ones if you were to pass away during the policy term.

As long as you keep up with your monthly payments, the payout amount remains the same throughout.

Why choose level cover?

• The payout stays consistent for the full term

• Helps cover living costs, childcare, or replace lost income

• Provides long-term financial security for your family

  
  

Who is it suitable for?

• Families with children

• People with interest-only mortgages

• Anyone looking for a reliable financial safety net

  
  

Decreasing Life Insurance

As it says on the tin, the payout reduces over time, typically in line with a repayment mortgage.

This means as your mortgage balance gets smaller, so does the potential payout. This makes it a practical and cost-effective option if your main goal is to cover your mortgage.

Why choose decreasing cover?

• Generally more affordable than level cover

• Designed to match a repayment mortgage

• Ensures you’re not paying for more cover than you need

Who is it suitable for?

• Homeowners with repayment mortgages

• Those looking for a lower-cost option

• People who don’t need a large payout later in life

Quick Comparison

Feature	Level Cover	Decreasing Cover
Payout	Stays the same	Reduces over time
Cost	Typically higher	Typically lower
Best for	Family protection, living costs	Repayment mortgage cover

So, Which Should You Choose?

It all comes down to what you want to protect.

If your priority is supporting your family financially, level cover may be the better option. If you’re mainly looking to protect your mortgage, decreasing cover could be more suitable.

Speaking to a protection specialist can help you make the right decision. Libby is on hand to guide you through your options and find the cover that best fits your needs.