Pay level premium for a decreasing cover?

Dear Mr Tan

I will be receiving my HDB flat soon.

I am looking at some of the mortgage protection insurance by various insurance companies. I noticed that the premium is not reducing although the sum assured decreases over the years. What is your opinion?

What advise you will give when buying mortgage protection insurance?

ET

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Dear ET

For the mortgage policy, it is usual to pay a level premium for a decreasing cover. Basically, the insurance company calculate the total cost of insurance for the term (based on the decreasing cover) and work out a level premium that matches the total cost. This type of arrangement is welcomed by the customer.

The premium for a decreasing cover is about 50% of the premium for a similar policy that provides a level cover throughout the term.