Decreasing term life insurance is one of the three major types of term insurance. Decreasing term life provides a death benefit that decreases in a specified manner.

For example, the benefit during the first year of a 5-year decreasing policy may be $10,000, and decrease by $2,000 every year. At the end of the fifth year, the face value is zero and coverage expires. Premiums for a decreasing policy usually remain level throughout the term.

InsureMe recommends decreasing term life insurance policies as a way to insurance financial obligations which reduce with time, such as mortgages or other amortized loans.

In fact, all mortgage insurance is decreasing because the policy begins with a death benefit that is equal to your current mortgage balance and then decreases at the same rate as your mortgage balance. Credit life is also is a form of decreasing term because your loan balance is lower each year and you need less to cover it.

The answer on this page was edited based on source material from the Ohio Dept. of Ins. and the Washington State Office of the Ins. Commissioner. These pages are no longer being updated. --Webmaster

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