On a repayment mortgage, every monthly payment reduces what you owe. Twenty years into a twenty-five year term, the outstanding balance is a fraction of what you originally borrowed. Decreasing term insurance mirrors that: the sum assured reduces over the policy term, so the cover roughly matches the debt rather than exceeding it.

Because the insurer's exposure falls every year, decreasing cover is normally the least expensive shape of term insurance. The premium itself stays level throughout; it is the payout that reduces, not what you pay.

"Roughly" is the important word. The sum assured reduces on a set schedule calculated at outset, usually assuming a particular interest rate. Your actual mortgage balance follows your actual rate. If your rate rises above the assumed figure, your balance reduces more slowly than the cover does, and a gap can open up.

In practice the gap is normally modest, but it is worth understanding rather than discovering. If you overpay your mortgage the gap runs the other way and you are simply over-covered, which costs nothing extra. We check the assumed rate against your mortgage when we set the policy up.

Decreasing cover is designed for a reducing balance and very little else. On an interest-only mortgage the balance does not reduce at all, so decreasing cover would leave a shortfall that widens every year. Level term is the correct shape there.

It is also the wrong tool for replacing income or covering the cost of raising children, because neither of those needs shrinks on a mortgage schedule. Using a cheap decreasing policy to cover everything is the most common way households end up materially underinsured in year fifteen.

Decreasing cover is frequently written with critical illness benefit attached, so the policy also pays out on diagnosis of a specified serious condition rather than only on death. For a mortgage, that matters: surviving a serious illness but being unable to work is considerably more likely than dying during the term, and it puts the same mortgage at the same risk.

Adding it raises the premium noticeably. Whether it is worth it depends on your sick pay, savings and whether you already hold income protection, which is exactly the sort of thing worth twenty minutes with an adviser.