Decreasing Term Life Insurance
Decreasing term life insurance provides financial security for a pre-determined, set period of time. Read this guide for tips on how to find decreasing term life insurance quotes online.
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Justin Wright
Licensed Insurance Agent
Justin Wright has been a licensed insurance broker for over 9 years. After graduating from Southeastern Seminary with a Masters in Philosophy, Justin started his career as a professor, teaching Philosophy and Ethics. Later, Justin obtained both his Property & Casualty license and his Life and Health license and began working for State Farm and Allstate. In 2020, Justin began working as an i...
Licensed Insurance Agent
UPDATED: Jul 7, 2023
It’s all about you. We want to help you make the right life insurance coverage choices.
Advertiser Disclosure: We strive to help you make confident life insurance decisions. Comparison shopping should be easy. We are not affiliated with any one life insurance company and cannot guarantee quotes from any single company.
Our life insurance industry partnerships don’t influence our content. Our opinions are our own. To compare quotes from many different life insurance companies please enter your ZIP code above to use the free quote tool. The more quotes you compare, the more chances to save.
Editorial Guidelines: We are a free online resource for anyone interested in learning more about life insurance. Our goal is to be an objective, third-party resource for everything life insurance-related. We update our site regularly, and all content is reviewed by life insurance experts.
UPDATED: Jul 7, 2023
It’s all about you. We want to help you make the right life insurance coverage choices.
Advertiser Disclosure: We strive to help you make confident life insurance decisions. Comparison shopping should be easy. We are not affiliated with any one life insurance company and cannot guarantee quotes from any single company.
Our life insurance industry partnerships don’t influence our content. Our opinions are our own. To compare quotes from many different life insurance companies please enter your ZIP code above to use the free quote tool. The more quotes you compare, the more chances to save.
On This Page
- Decreasing term life insurance is renewable.
- Decreasing term life insurance sees gradually decreasing coverage.
- The coverage decreases at a predetermined rate.
Are you wondering just what decreasing term life insurance is or if you need a decreasing term life insurance calculator? We’ll go over it step by step manner because we understand insurance is tricky. Knowing how the different terms and how to compare life insurance will help you find the best rates.
Find out more: How to buy term life insurance.
Decreasing term life insurance is often used to provide coverage for mortgages or personal loans.
In the meanwhile, get a start on finding reasonable decreasing term life insurance rates in your area by typing your ZIP code into our helpful and free tool above.
Looking for an overview of decreasing term life insurance?
This form of life insurance is renewable term life insurance that has consistent premiums throughout the contract. The reductions, which we will cover soon, occur either monthly or annually. These plans can prove to be more affordable than other forms of life insurance.
Let’s take a look at how the decreasing term policy payment schedule can affect the premiums you pay with a table.
| Payment Mode | Modal Factor | Periodic Rates | Total Annual Rates |
|---|---|---|---|
| Annual | 1.00 | $1,000 | $1,000 |
| Semi-Annual | .51 | $510 | $1,020 |
| Quarterly | .26 | $260 | $1,040 |
| Monthly | .087 | $87 | $1,044 |
Let’s take a look at a video further explaining the merits of decreasing term insurance.
The bottom line is this could help your family pay off a mortgage in the event of your untimely passing. Let’s move on to see what exactly decreases in decreasing term life insurance.
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What decreases in decreasing term life insurance?
What decreases in a decreasing term life insurance policy is essentially the value itself, in either a monthly or annual way. However, it is still seen as a particularly financially viable option if you are looking for a more short-term variation of coverage.
In short, what you would receive towards the beginning of the policy is more than what you would receive months or years down the line.
For more information, see life insurance terms for clarification and definitions of terms.
How does decreasing term life insurance work?
As we’ve said, the payout decreases over time. The benefit to decreasing term life insurance is seen as being able to cover a mortgage should a family member pass. In short, it works by providing more coverage should, say, a diagnosis prove to be for a short amount of time.
Are you ready to buy decreasing term life insurance? Feel free to type your ZIP code into our helpful and free tool below to find decreasing term life insurance rates in your area.
You can also check out how does life insurance work for more general details.
Your life insurance quotes are always free.
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Exploring Case Studies: Decreasing Term Life Insurance in Action
Case Study 1: Decreasing Term Life Insurance For Mortgage Coverage
In this fictional case study, John and Sarah are homeowners with a mortgage. They opt for decreasing term life insurance to provide coverage for their mortgage in the event of their untimely passing.
The value of their policy decreases over time, aligning with the decreasing balance of their mortgage. This case study highlights how decreasing term life insurance can be a financially viable option for individuals seeking short-term coverage.
Case Study 2: Short-Term Financial Protection With Decreasing Term Life Insurance
Sarah, a 35-year-old single mother, is diagnosed with a medical condition that requires treatment for a limited period of time. Worried about the potential financial impact on her family if she were to pass away during her treatment, she decides to purchase decreasing-term life insurance.
The policy provides higher coverage at the beginning, which gradually decreases over time. This case study illustrates how decreasing term life insurance can offer temporary coverage during critical periods.
Case Study 3: Decreasing Term Life Insurance For Personal Loan Security
Mark, a recent college graduate, decides to purchase a decreasing term life insurance policy to protect his family from the burden of his student loan debt.
As he begins his career and starts paying off his loans, the value of the policy decreases in sync with his decreasing debt balance. This case study showcases how decreasing term life insurance can be utilized to provide coverage for personal loans.
Frequently Asked Questions
Should I get level term or decreasing life insurance?
It depends on how long you intend on needing coverage.
What is mortgage decreasing term insurance?
Mortgage decreasing term insurance is a type of life insurance that decreases in payout over time, similar to decreasing term life insurance.
What are the disadvantages of term life insurance?
Disadvantages of term life insurance include increasing premium payments after the initial guarantee period, the temporary nature of the coverage, and the lack of cash value.
When should I drop term life insurance?
Term life insurance policies typically expire when the insured reaches 95 years of age.
Can you cash in a decreasing life insurance policy?
Yes, you can cash in a decreasing life insurance policy if you pass away or are diagnosed with a terminal illness with a life expectancy of less than 12 months.
What is the difference between level term and decreasing term?
In a level term policy, the payout remains the same throughout the term. In a decreasing term policy, the payout decreases over time.
Which aspects of a decreasing term policy actually decrease each year?
In a decreasing term policy, the death benefit decreases each year.
Your life insurance quotes are always free.
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Justin Wright
Licensed Insurance Agent
Justin Wright has been a licensed insurance broker for over 9 years. After graduating from Southeastern Seminary with a Masters in Philosophy, Justin started his career as a professor, teaching Philosophy and Ethics. Later, Justin obtained both his Property & Casualty license and his Life and Health license and began working for State Farm and Allstate. In 2020, Justin began working as an i...
Licensed Insurance Agent
Editorial Guidelines: We are a free online resource for anyone interested in learning more about life insurance. Our goal is to be an objective, third-party resource for everything life insurance-related. We update our site regularly, and all content is reviewed by life insurance experts.
