With mortgage balances and cost of life insurance cover falling, homeowners can now make substantial savings in their life insurance policies.

Many borrowers, who have repayment mortgages, are not aware that life insurance companies assume a standard interest rate of about 10% for the life of their mortgage.

This is mainly done in order to ensure there is adequate life insurance to repay their mortgage, if required.

Since a large number of borrowers have made overpayments and not paid anything close to 10% in recent times, their mortgage balance might be much lower than the required amount of a life insurance policy.

This seems to have given them the chance to lower the level of life insurance and save money.

With the competition stiff amongst life insurance companies and the cost of life cover reducing a little, people can now increase their life cover or get the same amount for a similar monthly outlay.

Recently an individual increased their life insurance cover from £390,000 to £423,000 to cover the new mortgage also managed to reduce the premiums. This helped save about £130 every month.

Currently, the UK population is underinsured quite significantly. Fortunately, individuals can now take advantage of smaller mortgage balances and use them to reduce premiums.

This is making it easier for families to provide, without significant affects on their bank accounts.