Decreasing Term Life Insurance

A decreasing term refers to as a term life insurance policy in which death benefit decreases as your age increases while premiums may remain the same throughout a term. This type of life insurance is mostly used to cover loans.

What is decreasing term life insurance?

Decreasing term is a type of term life insurance by which death benefit decreases over time, typically each year. However premiums may or may not remain the same throughout a term.

A single term may last several years usually ranges from 5 to 30 years. If a policyholder dies within a term his beneficiaries will receive death benefit from an insurer, but if outlives a term, he or she can renew it. Medical examination is usually required during the renewal of a term.

A decreasing term is often used to cover loans especially capital repayment mortgage.

Premium

Premium is a fee for the insurance policy. A policyholder have to pay premiums to make his policy active. Failing to pay the premiums may lead to the cancelation of the policy. 

In a decreasing term, premiums may or may not change over time, depending on a policy provider.

Death benefit

Death benefit is a cash amount received by beneficiaries after a policyholder's death. In decreasing term, death benefit tend to decrease as your age increases. 

Cash value

Cash value is an amount generated alongside the policy which allows a policyholder to access it while he or she is still alive. A cash value can be withdrawn or borrowed or used to pay premiums. 

A decreasing term doesn't have cash value.

Coverage length

Usually a decreasing term covers 5 to 30  years, depending on your needs and a policy provider.

How does it works?

Once you buy a decreasing term, an insurer guarantees you death benefit that decreases over time. If you die at the beginning of a term your beneficiaries will receive higher amount of death benefits than when you die at the end of a term, since death benefit decreases as you get older.