Decreasing Term Life Insurance

Decreasing term life insurance provides financial security for a pre-determined, set period of time. The death benefit is what decreases over time and are an affordable and smart choice to cover a short-term need. Affordable decreasing term life insurance quotes are not hard to find. Read this guide for tips on how to find decreasing term life insurance quotes online.

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Rachael Brennan has been working in the insurance industry since 2006 when she began working as a licensed insurance representative for 21st Century Insurance, during which time she earned her Property and Casualty license in all 50 states. After several years she expanded her insurance expertise, earning her license in Health and AD&D insurance as well. She has worked for small health in...

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Benjamin Carr was a licensed insurance agent in Georgia and has two years' experience in life, health, property and casualty coverage. He has worked with State Farm and other risk management firms. He is also a strategic writer and editor with a background in branding, marketing, and quality assurance. He has been in military newsrooms — literally on the frontline of journalism.

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Reviewed by Benji Carr
Former Licensed Life Insurance Agent

UPDATED: Jul 19, 2021

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Quick Facts

  • 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.

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 you 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.

According to efinancial.com, these plans can prove to be more affordable than other forms of life insurance.

Let’s take a look at how the payment schedule can affect the premiums you pay with a table.

Average Term Life Insurance Modal Rates
Payment ModeModal FactorPeriodic RatesTotal Annual Rates
Annual1.00$1,000$1,000
Semi-Annual.51$510$1,020
Quarterly.26$260$1,040
Monthly.087$87$1,044
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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 financial 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.

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.

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Frequently Asked Questions

Now that you know the decreasing term life insurance definition and more, we hope you’re ready to buy. However, if you have more questions, feel free to take a look at some commonly asked ones below.

Should I get level term or decreasing life insurance?

It all depends on how long you intend on needing coverage.

What is mortgage decreasing term insurance?

Just as with life insurance, mortgage decreasing term insurance decreases in payout over tie.

What are the disadvantages of term life insurance?

Premium payments increase after initial guarantee period, it is intended to be temporary, and has no cash value.

When should I drop term life insurance?

Just keep in mind that the policies expire when the insured reaches 95.

Can you cash in a decreasing life insurance policy?

Yes, if you die 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?

With a level term policy, should you die within the term, your loved ones will be paid a set, pre-agreed sum.

Which aspects of a decreasing term policy actually decrease each year?

In short, the death benefit.

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