What
is Decreasing Term Life Insurance?
Decreasing term insurance is a variation of term life insurance
that is structured to have a level premium with a decreasing
face amount that reduces over time. Historically, decreasing
term policies have been used to cover financial obligations
such as amortized loans and mortgages that have declining
balances over time.
Decreasing Term Life Insurance Quote
How Does Decreasing Term Insurance Work?
Decreasing term insurance is simple to understand. You
purchase an initial face amount of life insurance at
guaranteed level rate. As the years go by, the insurance
coverage reduces incrementally and eventually goes down
to an established minimum, say $10,000, or even to zero
in some cases. Even though coverage reduces your
premiums remain the same. With most decreasing term policies
you can design them to have a declining balance over
20 or 30 years. As with most term insurance, decreasing
term builds no cash value and is very affordable.
Why Buy Decreasing Term Insurance?
Traditionally, decreasing term insurance has been a
great solution for covering temporary needs that reduce
over time. One of the best uses of decreasing term is
as mortgage life insurance to pay off
your home in the event of your death. The cost for decreasing
term is relatively inexpensive and you can design a policy
that matches your declining mortgage balance. Other uses
include insuring any personal or business loans that
have a measurable payoff schedule.
Is Decreasing Term Life A Good Option for You?
Historically, decreasing term life insurance has been
very affordable when compared to other life insurance
options. More recently though, with the advent of level
term insurance, decreasing term has become significantly
less popular. In fact, outside of the companies specializing
in mortgage protection, very few of the competitive term
companies still offer this type of protection.
The main reason for the decline in popularity of decreasing
term is that in today’s marketplace you can buy
level term insurance (with a level premium and death
benefit) at lower rates. In other words, there is no
decreasing balance of insurance and the premiums are
lower. Since it doesn’t makes sense to pay more
for less benefits, decreasing term insurance is no longer
ultimately competitive in today's marketplace. When considering
decreasing term, you should always get a comparable level
term life quote.
Summary
Decreasing term is term life insurance that has a fixed
rate and provides coverage that reduces over time. Like
most term plans, decreasing term is inexpensive and does
not build cash value. It is great for situations involving
declining balances such as mortgages and other amortized
loans. If you are in need of coverage to protect your
home mortgage or business loan, you should compare decreasing
term and level term insurance. If you have questions
or would like a custom life insurance quote, call
MEG Financial today at (877) 583-3955. We represent
over 100 insurance companies and can match you up with
the company that will offer you the best policy!
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