Decreasing Term Life Insurance

Updated: 09 June 2023

What Does Decreasing Term Life Insurance Mean?

Decreasing term life insurance is a type of term life insurance whose death benefit decreases at a set rate as the policy matures. Premiums normally remain the same throughout the life of the policy, which can range from one to 30 years. The decrease in the death benefit may occur monthly or annually.

Insuranceopedia Explains Decreasing Term Life Insurance

The majority of decreasing term life insurance comes in the form of mortgage life insurance. On the one hand, lenders are secured as they will still receive payment even if the borrower-insured passes, and on the other, the family or beneficiaries of the insured are spared from getting in financial trouble due to unpaid debts or being evicted from the property due to an unpaid mortgage. The logic is that the longer the borrower-insured lives, the more they have paid toward their mortgage and the less the death benefit needs to be to pay off the remaining balance, should they pass away.

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