Key facts: Level term pays the same sum whenever you die within the term — right for income replacement, interest-only mortgages and fixed legacies. Decreasing term shrinks roughly in line with a repayment mortgage and is meaningfully cheaper — right for protecting a reducing debt. Many families correctly hold one of each.
Level term: the flat payout
£200,000 of level cover pays £200,000 in year one or year nineteen. That constancy suits needs that don't shrink: replacing a breadwinner's income for a fixed period, covering an interest-only mortgage (where the debt never reduces), or guaranteeing a sum for children's costs. Family income benefit — a variant paying a monthly income instead of a lump sum — often serves income replacement even better and cheaper; see family cover options.
Decreasing term: tracking the mortgage down
The payout falls each year along a curve designed to shadow a repayment mortgage balance. Because the insurer's exposure shrinks constantly, premiums run noticeably below level cover — the efficient choice when the liability itself is shrinking. Match the policy's term and interest-rate assumption to your mortgage so the cover curve stays above the debt curve; your broker checks this in minutes. It's the default half of most mortgage protection setups.
Choosing — or combining
The test is the shape of what you're protecting. Shrinking debt → decreasing. Flat or human-shaped need → level (or family income benefit). Most households with a repayment mortgage and dependants genuinely have both shapes at once — hence the classic pairing: decreasing term sized to the mortgage plus level cover (or FIB) sized to the family. Two policies also mean one can pay out without exhausting the other, unlike a single combined sum.
The pricing and small-print details
Decreasing term's saving over level typically runs 20–40% for the same starting sum. Both are fixed-premium for the term. Watch two details: joint policies pay once then end (two singles usually serve couples better), and adding critical illness transforms both price and value — worth a deliberate decision rather than a checkbox either way.
Getting the shape right
A protection specialist will map your debts and dependants to the right mix and price it across the market. Compare life insurance through Nesto — free, no obligation.
Frequently asked questions
Which is cheaper, level or decreasing term?
Decreasing — typically 20–40% cheaper for the same starting sum, because the insurer's exposure falls throughout.
Which suits an interest-only mortgage?
Level term — the debt doesn't reduce, so the cover shouldn't either.
Can I have both types at once?
Yes, and many families should — decreasing for the mortgage, level (or family income benefit) for the household.
What if I remortgage or move?
Review the cover — a new balance, rate or term can open a gap between the policy curve and the debt. Policies can be topped up or replaced.