How the falling sum works
You choose a starting amount, usually your mortgage balance, and a term, usually the years left on the loan. The insurer then reduces the sum insured gradually across the term. A claim early on pays close to the full starting figure. A claim in the last few years pays a small amount, and at the end the cover reaches zero.
Your premium does not fall with the cover. You pay the same amount each month, and that fixed cost is lower than level cover would be, because the insurer expects to pay less on average.
Why it pairs with a repayment mortgage
Each repayment mortgage payment clears some of the loan, so the debt your family would inherit gets smaller every year. Decreasing cover is designed to follow that path. The aim is that, whenever a claim happens, the payout is roughly enough to clear what you still owe.
Insurers calculate the falling sum using an assumed mortgage interest rate. If your actual rate sits well above that assumption for long periods, your balance may shrink more slowly than the cover. We check the assumed rate on each policy and, where it matters, suggest a small margin of extra cover.
- Start the cover at your current outstanding balance
- End it no earlier than your mortgage end date
- Check the insurer's assumed rate against your deal
Where decreasing cover falls short
Decreasing cover only aims to clear a debt. It does not leave money for bills, childcare or the years when your partner might work less. Families with children often add level cover or family income benefit for those costs.
It also does not fit an interest-only loan, because that balance stays the same until the end. And if you borrow more, extend your mortgage term or move house, the policy will not adjust by itself. You would need to review it and possibly add a top-up policy.
Adding critical illness cover
Many decreasing policies can include critical illness cover, so the same falling sum pays on diagnosis of a listed serious condition as well as on death. The plan pays once, on whichever event comes first. It raises the premium, and for some people a separate, smaller critical illness policy works out better value. We can price both for you.
How we help you match cover to your loan
Send us your balance, rate, term and mortgage type, and we will build decreasing cover around them. If you are buying a home, we can line the start date up with completion so you are protected from the day you get the keys.
We compare the insurers on our panel, explain the assumed rate in plain words and help you decide whether a trust is worth setting up. If your mortgage changes later, tell us and we will check that your cover still fits.