Decreasing term life insurance has a unique feature: The coverage amount declines along with your debt amount, at a fixed pace of decreases. But the life insurance premium you pay stays the same until the policy ends. If you pass away while the coverage is in force, the death benefit can be used to pay the remaining balance.
Decreasing term life insurance has a specific end date that is aligned to the date the debt will be paid off. For example, iIf you purchase a decreasing term policy for 20 years to cover a mortgage, the policy’s death benefit will continue to decrease over 20 years until the coverage ends.
If you purchase this type of coverage, a schedule will be issued that shows your decreasing death benefit over time. The death benefit typically is reduced by either a set amount or a percentage.
When Should You Buy a Decreasing Term Life Insurance Policy?
You Have a Mortgage
Say you have a mortgage with $300,000 left. Your death benefit begins at $300,000 when you buy the policy and decreases cover time, as you continue to pay the mortgage down. If you have decreasing term life your family has a way to pay off the mortgage if you pass away while the policy is in force.
You a Have Small Business Loan
If you or a co-owner of the business dies, the death benefit from a decreasing term life policy can pay off a small business loan. This financially protects a business from the unexpected death of an owner.
Decreasing Term Life Insurance Costs
Although your death benefit will become smaller over time as your term life insurance coverage decreases, your premium will stay the same. The premium for a decreasing term policy depends on factors such as:
- Coverage amount and length of policy
- Family health history (parents and siblings)
Pros and Cons of Decreasing Term Insurance
In many cases, level term life insurance may be a smarter purchase because it is not tied to one loan. A regular term life insurance can give your family more flexibility by providing funds for a wide variety of obligations over time.
Best Life Insurance Companies 2024
Whether you’re reevaluating your needs or buying life insurance for the first time, it is always a good time to add life insurance to your financial plan. Georgia residents have no shortage of options for life insurance. We evaluated key metrics and found that Corebridge Financial, Pacific Life, Protective and Symetra are the best life insurance companies in Georgia.
Life insurance is an important component of a well-rounded financial plan. Whether you’re reevaluating your needs or buying for the first time, it’s a great time to consider your life insurance options. We evaluated key metrics for different types of life insurance from many companies and found that the best life insurance company in New York is Ameritas.
How to Find the Best Life Insurance in New York
When shopping for life insurance in New York, you may notice there are quite a few companies that don’t sell policies in your state. The life insurance industry is regulated at the state level, which means that insurers must determine if they can sell in a particular state and, if so, which products will be approved by the state to sell. This generally doesn’t cause problems for companies since most states have standardized laws and regulations for the life insurance industry. There is usually not much need for variation of product terms and conditions from state to state. “However, New York stands out with unique regulations and consumer protection laws for the life insurance industry. As a result, life insurance companies have had to adapt themselves and their products to comply with New York regulations or to choose not to do business in New York,” says Daniel Adams, Forbes Advisor advisory board member. Adams explains that companies have adapted by creating separate life insurance companies that offer products specifically designed for approval and sale in New York. As a result, New Yorkers will see different life insurance companies, products and premiums than residents of other states.