Decreasing mortgage term life insurance

[Mull]

Hi, I’m hoping someone can advise, I promise I have Googled but just get a lot of sites trying to sell me life insurance!

I know we have life insurance which is linked to the mortgage and so I’m pretty sure it’s a decreasing term policy (obviously I need to find the paperwork and double check that!) My question is that we have been steadily overpaying the mortgage and the plan is that it will be finished in the next 3 years. So should I be stopping the life insurance at some point? If we carried on paying the premium afterwards we would get a Nil payout regardless, have I got that right? Should we have some sort of other life insurance instead? I think we have critical illness as part of the policy, should we be looking to keep that anyway or is that also only for mortgage payments?

Thanks in advance and sorry for the brain dump, I think I’ve confused myself now!

Someone more knowledgeable will come along but I'm pretty sure decreasing life insurance pay outs per year are set when you take out the policy, so x in year 1, y in year 2 etc based on what details you provided about the mortgage at the time. Just because you've paid it off early doesn't mean your life insurance pay out would be zero (unless you cancel policy or term of policy runs out). I think it's linked only in the sense of how the premiums and pay outs are calculated at the beginning.

Critical illness would pay out if you develop one of the covered conditions, and again I imagine would be separate to what your actual mortgage is at that date. Ours is a set amount and not decreasing but I don't know how standard that is.

As for whether you should continue life insurance policy after the mortgage is paid off, that may depend on factors such as if you have dependents, what pension arrangements you have (and if there is any occupational death in service component of pension). Ultimately what money would you want or need for any surviving partner/children.

I'm not an expert but that's my understanding.

I think first and foremost you need to decide how much you would wish to leave any surviving dependents in the event of your death and what the money is to be used for.

if your wish is to to leave a lump sump, decreasing term life assurance is not the most economical way of doing this as the longer you live having cleared the mortgage, the less the payment will be.

We have been aggressively overpaying our mortgage, and I contacted our life assurance company to verify if/how it would affect payout if one of us were to croak it. We also have a decreasing term product, and our insurer would pay out what they believe the mortgage balance would be at that point, meaning the surviving partner would have enough to clear the mortgage and a generous cash sum on top. We were quoted for a new policy taking the current balance into consideration. I was quite surprised how little difference our lower balance made to our monthly fee and on that basis, we have not updated our policy to reflect our lower mortgage debt.

When we are mortgage free, we will cancel our policy and look to self insure against funeral fees through savings. Savings, investments and pensions would then offer comfort and security to surviving dependents in the event of one or both of us having an untimely demise

We have a critical illness and life policy that decreases, the policy book we got contained a table of what we would receive with each passing year - they worked that out based on the mortgage we were taking out at that point, though we have moved house and changed mortgage since (and have another, non-decreasing policy too). I didn't want to cancel this one as the critical illness benefits were a big attraction, and I wouldn't get the same now due to advancing years and health conditions.
Basically, my policy pays out a sum that decreases but has no actual relationship to the mortgage we have remaining.

^ What Its said.