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Decreasing or level sum insured: which is better?

In short

It depends on the purpose. A level sum insured (konstante Versicherungssumme) fits family and maintenance needs; a decreasing one (fallende Versicherungssumme) fits a German annuity mortgage. For the same starting sum the decreasing version costs about 30 to 52 percent less. The catch: a straight-line decrease falls faster than the debt and leaves about EUR 38,000 uncovered in year 16 on a EUR 300,000 loan.

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Decreasing or level sum insured: which is better?

What it costs

Premium ranges for the same starting sum of EUR 300,000, non-smokers with no pre-existing conditions, plus one documented single example.

Example	Typical range
Age 30, non-smoker, EUR 300,000 level, 30 years	about EUR 13 to 25 a month
Age 30, non-smoker, EUR 300,000 decreasing, 30 years	about EUR 7 to 13 a month, roughly 50 percent less
Age 40, non-smoker, EUR 300,000 level, 25 years	about EUR 32 to 60 a month
Age 40, non-smoker, EUR 300,000 decreasing, 25 years	about EUR 16 to 32 a month, roughly 45 to 50 percent less
Age 35, smoker, EUR 300,000 level, 30 years	about EUR 60 to 110 a month
Age 35, smoker, EUR 300,000 decreasing, 30 years	about EUR 30 to 55 a month, roughly 50 percent less
Documented single example: age 30, non-smoker, EUR 180,000	EUR 13.12 level against EUR 6.24 decreasing, so 52 percent less

As of September 2026. The EUR 180,000 example and the saving of about 30 to 52 percent are taken from published figures; the ranges for EUR 300,000 and the amounts in the worked example are guide values from our quoting practice. Your premium depends on age, health, job and insurer; we obtain the exact quote for you.

Worked example

Annuity mortgage of EUR 300,000 at 3.5 percent over 30 years

A 35 year old non-smoker covers the outstanding debt. What the decreasing version saves, and what it leaves open if the worst happens.

Premium, level sum of EUR 300,000, 30 years	about EUR 24 a month
Premium, straight-line decreasing, same starting sum	about EUR 12 a month
Saving over the full term	about EUR 12 a month, around EUR 4,320 in total
Death in year 16, debt still owed to the bank	about EUR 178,100
Payout of the straight-line policy	EUR 140,000
Shortfall for the family	about EUR 38,100
Premium for mortgage-linked instead of straight-line	about EUR 13 a month, payout in year 16 about EUR 178,100

The straight-line policy saves around EUR 4,320 in premiums but leaves about EUR 38,100 of debt uncovered in year 16. The mortgage-linked version costs roughly EUR 360 more over the term and closes exactly that gap. That is the better trade.

The comparison in numbers

German term life insurance is called Risikolebensversicherung and works like term life cover in the UK or US. In both versions the monthly premium stays the same for the whole term. What differs is the payout: a level sum pays as much on the last day as on the first, a decreasing sum falls along a schedule agreed at the start.

Because the insurer carries less risk on average, the decreasing version is much cheaper. A published example for a 30 year old non-smoking engineer with a starting sum of EUR 180,000 shows EUR 13.12 a month for the level sum and EUR 6.24 for the decreasing one, which is 52 percent less.

Feature	Level sum insured	Decreasing sum insured
Payout on death	always the full sum	falls every year to plan
Premium for the same starting sum	higher, the 100 percent benchmark	about 48 to 70 percent of it
Fits	children, maintenance, inheritance tax reserve, business partner	annuity mortgage with a falling balance
After an extra repayment (Sondertilgung)	unchanged, the money stays with the family	may be too high, you pay for cover nobody needs
If the need grows	increase only with a top-up option (Nachversicherungsgarantie)	hurts twice, because the sum keeps falling
At refinancing (Anschlussfinanzierung)	independent of the bank	the pattern often no longer fits the new instalment

When level and when decreasing

Level cover belongs where the need does not shrink. A child does not need less money at twelve than at two, maintenance runs until the end of training, and a reserve for German inheritance tax (Erbschaftsteuer) does not get smaller. The same applies if you insure a business partner whose share would have to be bought out.

Decreasing cover belongs to the loan and almost nowhere else. If only EUR 136,000 is outstanding after twenty years, the policy only needs to pay EUR 136,000. Choosing a level sum here means paying for cover nobody needs any more.

The gap almost nobody mentions

The real question is not level against decreasing, it is the shape of the decrease. A German annuity mortgage (Annuitätendarlehen) repays slowly at first, because most of the instalment is interest. A straight-line decreasing sum, by contrast, falls by the same amount every year. In the middle years a gap opens between what the bank still claims and what the policy pays.

The table shows this for EUR 300,000 at 3.5 percent over 30 years. The mortgage-linked decrease follows the outstanding balance (Restschuld) and matches it every year; the straight-line version sits about EUR 38,000 below it in year 16. Ask explicitly for the mortgage-linked pattern, not just for a decreasing sum.

Year	Outstanding debt	Straight-line cover	Mortgage-linked cover	Straight-line shortfall
1	EUR 294,200	EUR 290,000	EUR 294,200	EUR 4,200
5	EUR 268,800	EUR 250,000	EUR 268,800	EUR 18,800
10	EUR 231,800	EUR 200,000	EUR 231,800	EUR 31,800
15	EUR 187,800	EUR 150,000	EUR 187,800	EUR 37,800
16	EUR 178,100	EUR 140,000	EUR 178,100	EUR 38,100
20	EUR 135,700	EUR 100,000	EUR 135,700	EUR 35,700
25	EUR 73,600	EUR 50,000	EUR 73,600	EUR 23,600

Extra repayments and refinancing move everything

The decrease is fixed when the policy starts, but your loan behaves differently. After an extra repayment the outstanding debt is lower than the sum insured, so you pay for cover you no longer need. A payment holiday works the other way round: the debt stays put, the sum keeps falling, and the gap grows.

Refinancing matters even more. German fixed-interest periods usually end after ten or fifteen years, and the new instalment has nothing to do with the old repayment schedule (Tilgungsplan). Check the pattern at that date and have the policy adjusted, instead of trusting a plan drawn up in the year you signed.

The mixed solution is often the cheapest

Split the two purposes and take two policies: a level one for the family need and a mortgage-linked decreasing one for the loan. That is usually cheaper than one large level sum, because only the smaller part carries the expensive rate.

Example for a 35 year old non-smoker with EUR 100,000 of family need and EUR 300,000 of mortgage debt: one level sum of EUR 400,000 costs roughly EUR 32 a month. The combination of EUR 100,000 level (about EUR 8) and EUR 300,000 mortgage-linked decreasing (about EUR 13) costs about EUR 21. Same protection on day one, roughly a third less premium.

Step by step

Separate the purposes: what hangs on the loan, what on family and maintenance?
Ask your bank for the repayment schedule (Tilgungsplan) and read off the debt for each year.
For the loan part insist on a mortgage-linked decrease (annuitätisch fallend), not just a decreasing sum.
For the family part choose a level sum with a term that runs until the children are independent.
Price both versions with the same starting sum and add up the premiums over the whole term.

Checklist

Repayment schedule to hand and compared with the cover pattern
With a straight-line decrease, the middle-year gap is known and accepted
Extra repayments and the refinancing date are planned for
Family need insured separately from the loan need
Top-up option without new health questions agreed
Both the quoted premium (Zahlbeitrag) and the maximum premium (Bruttobeitrag) compared

Common mistakes

Taking a straight-line decrease for an annuity mortgage and missing the gap in the middle years
Making the whole cover decreasing although children and maintenance need as much at the end as at the start
Not reviewing the cover pattern after an extra repayment or a refinancing
Looking only at the lower premium without checking what the policy pays in year 15

Questions and answers

Frequently asked

What is the difference between straight-line and mortgage-linked decrease?

Straight-line (linear fallend) means the sum falls by the same amount every year. Mortgage-linked (annuitätisch fallend) means it follows your repayment schedule and accounts for interest. Only the second matches the debt on a German annuity mortgage.

Is a decreasing sum always cheaper?

In premium yes, about 30 to 52 percent for the same starting sum. In outcome only if your need really shrinks. With children and maintenance it does not.

What happens after an extra repayment?

The debt drops faster than the sum insured, so you pay for cover nobody needs. Ask to reduce the sum or to reset the pattern.

Can I switch from decreasing to level later?

Only if the contract allows it or you hold a top-up option. Otherwise you need a new policy with new health questions, which gets more expensive and harder with age.

Does a German bank require a decreasing sum?

No. Banks often want some cover for a mortgage, especially with a single earner, but they leave the design to you and you are not tied to their own policy.

Is the mixed solution with two policies worth it?

Often yes. A level base policy for the family plus a decreasing one for the loan costs roughly a third less in our example than one large level sum.

Do I need documents in English?

Some insurers provide English service, many do not, and the German wording is what counts in a claim. Ask us when a clause is unclear.