The amount of cover did not always match the outstanding loan balance. Also clients who wished to refinance or purchase a new home would find that the existing policy could not meet their new needs. Accordingly a new policy was required. The modern approach is to use normal term life policies for the purpose of securing loans. These are no more expensive but do not automatically reduce the cover.
Clients can however reduce the cover if they wish at a future time.
Insurance companies have standard rates which they apply depending on the amount of cover sought, age, gender and smoking status of the life to be insured. However these are only preliminary and are not binding on the insurer. They are used to give an indication of the minimum premium available from that insurer. If you have good health and are not exposed to any dangers in your work or lifestyle then the standard rate may apply. Insurers however can apply loadings to those rates if you experience medical difficulties or are exposed to other dangers.