Benefits of Decreasing Term Life Insurance
Decreasing term life insurance is a type of life insurance policy that provides coverage for a specific period of time, such as 10 or 30 years. The death benefit of the policy decreases over time, in line with the outstanding balance of your mortgage or other debts. This type of policy can be a good option for people who want to protect their loved ones from financial hardship in case of their death, but who don’t need a large death benefit for the long term.
If you have an outstanding mortgage and people who rely on you financially, what would happen in the event you were no longer around to pay it? A decreasing term life insurance policy can solve this problem by paying out a big enough sum to clear the debt in the event you were to die prematurely.
Decreasing term life provides coverage for a set period of time, but the payout amount decreases over the life of the policy at a specified rate.
Decreasing term life coverage usually lasts five to 30 years. The death benefit decreases over time on a schedule set by your insurer.
For example, the coverage amount might correspond with a personal loan or mortgage payment schedule.
Your provider could also set the death benefit to decrease by $100,000 every five years, or set a percentage decrease every year.