The Decreasing Term Life Policy

For most term insurance policies, the death benefit remain constant and the premium increases over time. With a decreasing term life policy, the opposite is true: After the specified term, the face value of the policy decreases, while the amount you pay each year or month remains the same. In that way, the insurance company effectively increases its premium,
which it must do because, as you age, you’re at a greater risk for death. So the same premium purchases an increasingly lower amount of insurance. For many people, decreasing term life insurance allows them to be insured to the maximum when they most need it (when their beneficiaries are most dependent on them) but to be insured for lower amounts as their beneficiaries need less. Because the premiums remain locked in, budgeting is simple — you always pay the same amount. Mortgage insurance is an example of decreasing term insurance. When you buy mortgage insurance, you’re making sure that your home mortgage gets paid off if you die. But of course, while you’re alive, you’re paying off your mortgage principal, so the balance keeps declining.