What Does A Decreasing Term Policy Contain When It Is Purchased?
Decreasing term life insurance policies provide coverage for a specific period, usually between 5 and 30 years, and are more affordable than standard term life policies. When you purchase a decreasing term policy, you choose the policy’s duration and the initial death benefit amount. After that, the payout your beneficiaries can receive will decrease each month or year, depending on the policy, until it eventually reaches zero. If you pass away during the policy’s term, your beneficiaries can file a claim for the death benefit amount available at the time of your passing.
| Pros | Cons |
|---|---|
| More affordable than standard term life policies | The payout amount decreases over time |
| Offers security for decreasing expenses, such as mortgage or business loans | May not be available through all insurers |
| Can be a more affordable way to offer protection for children or family members who depend on your income less and less as time passes | If your loved ones will need the original death benefit amount even if you pass away at an older age, non-decreasing types of life insurance may be more appropriate |
If you’re interested in a decreasing term life insurance policy, you may need to shop around for insurers that offer it since it isn’t available through all insurers. Consider a decreasing term life insurance policy if you have specific expenses or debts that you want to make sure are covered in case you pass away, and your beneficiaries won’t depend on your income long-term. Use a life insurance calculator to determine the right amount of life insurance for your loved ones.
