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Decreasing Term Life
Decreasing term life insurance is the insurance companies' response to insurers' lack of desire for paying a higher premium each year they get older. The decreasing term insurance rates stay the same throughout the term of the insurance, but the death benefit reduces each year until the amount of death benefit is equal to the premium, meaning the policy would then become obsolete. This type of coverage is often used to fulfill a financial obligation which goes down over time, such as a mortgage. Since the outstanding mortgage balance goes down every year, so does the level of the insurance.
Rates for Decreasing Term Life Insurance Policies
Premiums are lower for decreasing term insurance than for level term insurance, because the benefit is lowering over time. The decreasing term life insurance policy is a temporary policy that begins at a certain rate, and, instead of increasing premiums as you get older and your health risks increase, the decreasing term life insurance company simply reduces the coverage until the policy becomes equal to the payment, or essentially worthless. In this way, a decreasing term life insurance policy can protect a person for a shorter period of time than a permanent life insurance policy, which may be appropriate for some people or for a specific need, such as a loan or mortgage.
Decreasing Term Insurance and Steady Payments
What does "decreasing term life insurance" mean exactly? For instance, if you were paying $2,000 annually at 45 years old, then each year you would continue paying the same amount of money but would have reduced coverage. The decreasing term life insurance policy states that the death benefit payout will decrease every year. By the time of your death, your premium should be equal to the payout. If the insurance company figures from their statistics that your decreasing term life insurance has met the time period when they believe you will die, then your policy will no longer be necessary.
Getting a Cheap Decreasing Term Life Insurance Quote
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