Term Life Insurance / Decreasing Term Insurance
With a decreasing term life insurance the death benefit amount
decreases over the term of the policy according to a function that is
included in the policy. You might start with a $200,000 of death benefit
and have this amount regularly decreased to reach $50,000 by the end
of the term. With some decreasing term policies the premiums remain
constant over the term, with others premiums vary.
The most common reason for buying a decreasing term policy
is large loan coverage. As you pay off the loan and the outstanding
balance decreases, the coverage provided by the insurance policy is
also reduced.
Decreasing term life policies are not common today.
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