Have short-term financial needs, like paying off a loan? Decreasing term life insurance can keep you protected while helping you save on your policy.
Term life insurance plans keep you covered financially for a set period of time. With a decreasing term life insurance policy, the death benefit for the plan decreases over time. These plans are generally more affordable than other types of term life insurance, making them a smart choice if you just need insurance to cover a temporary need or plan to leave little to no debt for your family to pay off.
With term life insurance, you can choose from a variety of different term lengths, usually between five and 30 years. If you die while the policy is in force, your family will receive a lump sum of cash called a death benefit. With a decreasing term policy, your death benefit will go down by a scheduled percentage during every year of your policy.
For example, let’s say you buy a 20-year plan with a $200,000 payout and reduction rate of 5%. If you die during the first year of coverage, your loved ones would receive the full benefit amount, or $200,000. Every year after that, the payout would decrease by 5%. At the end of the fifth year, your benefit would be $150,000, or 25% less than the starting amount. The payout would keep decreasing until it is either paid out to your family when you pass away or the policy term is up.
Decreasing term life insurance can offer financial protection for you and your loved ones in a variety of ways:
Premiums for decreasing term life insurance tend to be lower than other term life plans, making them a cost-effective way to protect your family financially.
If you have a mortgage or are starting a family, decreasing term life insurance can offer financial security during the years you need it most.
With decreasing term, you’ll have a backup plan in place if you die before your financial obligations are met. This could help your loved ones pay off loans, debt, or any other expenses.
At eFinancial, we’re committed to helping individuals, couples, and families find the best life insurance plan for their lifestyle and budget. We offer top products and personalized, expert support from our team of life insurance agents.
Our goal is to make the process as easy and affordable as possible. We’ll work with you to determine the best coverage for your needs and guide you through the approval process.
With a level term policy, your monthly or yearly premium and the benefit payout amount remain the same, or level, throughout the entire policy. Decreasing term policies tend to have lower premiums than level term policies, since the death benefit you would receive gets lower over time.
In some cases, yes. Your insurance company may offer you the option of adding riders to your policy. For example, a terminal illness or critical illness rider can give you extra protection and allow you to access your benefit if you and your family deal with a medical emergency.
Yes and no. The idea is similar, because a decreasing term policy’s face amount can be structured to mirror the scheduled balance of a long-term debt. But credit or mortgage life insurance benefits are usually paid directly to your lender, not a family member or loved one. With a decreasing term policy, you choose your beneficiary and the payout can be used for more than just loan repayment.
To learn more, start your free, no-obligation online quote or call 800-957-9525 to talk with one of our agents.
