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Life Insurance Learning Center - Term Life Insurance Types

Decreasing Term Life Insurance - Part 1

Decreasing term life insurance has a declining death benefit, ultimately reaching zero at the end of the policy term. Premiums are usually the same during the coverage period, and can sometimes be paid before the duration of the coverage is over. For example, a decreasing term life insurance policy covering 20 years may only require premiums paid for 16 years.

The coverage is similar to the level term duration: it can go for a set number of years, or until the insured reaches a certain age. Because the death benefit is high in relation to the premium paid initially, decreasing term life insurance is popular and widely purchased. However, there are some negative aspects to this type of term life insurance.

Given steadily declining death benefit as the policy ages, in the event the insured's health were to suddenly a turn for the worse, the beneficiary would want the maximum coverage possible; you wouldn't want the death benefit to decrease as your health declines. In straight life insurance, the death benefit decreases also, but a lot slower than decreasing term life insurance policies.

CONTINUED...

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