Decreasing Term Life Insurance

Decreasing term insurance could be a great choice if you are looking for temporary coverage while you pay off a debt or financial obligation, such as:

• Mortgage
• Auto loan
• Business loan or partnership
• Personal loan
• College loan

Big life changes, such as starting a family or a new job, can also be a good reason to consider decreasing term insurance. And if you have little to no debt, or plan to be debt-free, a decreasing term policy can be an affordable choice for short- or long-term coverage.

With a level term policy, your monthly or yearly premium and the benefit payout amount remain the same, or level, throughout the entire policy. Decreasing term policies tend to have lower premiums than level term policies, since the death benefit you would receive gets lower over time.

In some cases, yes. Your insurance company may offer you the option of adding riders to your policy. For example, a terminal illness or critical illness rider can give you extra protection and allow you to access your benefit if you and your family deal with a medical emergency.

Yes and no. The idea is similar, because a decreasing term policy’s face amount can be structured to mirror the scheduled balance of a long-term debt. But credit or mortgage life insurance benefits are usually paid directly to your lender, not a family member or loved one. With a decreasing term policy, you choose your beneficiary and the payout can be used for more than just loan repayment.