What Happens At The End Of A Decreasing Life Insurance Policy?
A decreasing term life insurance policy provides coverage for a specific period, usually between five and 30 years. The death benefit amount your beneficiaries can receive reduces every month or year (depending on the policy) after you purchase the policy.
Example of Decreasing Term Life Insurance Policy
| Policy | Amount | Term | Rate of Decrease | Payout after 10 years |
|---|---|---|---|---|
| Decreasing term life | $300,000 | 30 years | 3.33% | $210,000 |
If you die during the policy’s term, your beneficiaries can claim the death benefit amount available at that time. If you outlive the policy’s term, the death benefit will have decreased to zero, and your coverage will terminate. Decreasing term life insurance is more affordable than permanent policies like whole life and universal life, and it is even more affordable than standard term life policies.
Who Should Get Decreasing Term Life Insurance Policy
If you have specific expenses or debts that you want to cover in case you pass away, and your beneficiaries won’t depend on your income long-term, decreasing term life insurance is an excellent option. For instance, if your spouse has their own income or if your children are grown and self-sufficient, then decreasing term life insurance can provide timely security for decreasing expenses. However, decreasing term life insurance may not make sense if your loved ones will need the original death benefit amount even if you pass away at an older age.
It’s important to note that decreasing term life insurance is not available through all insurers. Therefore, you may need to shop around for life insurance and see who offers it. Use our life insurance calculator to determine the right amount of life insurance for your loved ones.
