What Is Decreasing Term? Definition

Why it matters

Decreasing term fits debts that shrink over time, such as a mortgage that is paid down each year. The death benefit tracks the falling balance. Level term is more popular today because the death benefit stays the same, and it fits needs like income replacement. Families should confirm how the benefit declines and compare the price with a level term policy. Availability and schedules vary by carrier.

Source: iii.org

Where we use this term

Mortgage protection vs term life vs PMI: who does each one protect?

Related terms

Term Life Insurance: Term life insurance is coverage that lasts for a fixed period, such as 10, 20, or 30 years. It pays a death benefit only if the insured dies during that term. It usually builds no cash value.
Mortgage Protection Insurance: Mortgage protection insurance is life insurance bought to help a family pay off or keep paying a home loan if the insured dies. The term is a marketing name, not a distinct legal type of policy.
Level Premium: A level premium is a payment that stays the same for the life of the policy or for a set period, such as a 20-year term. It does not rise as the insured gets older.
Death Benefit: A death benefit is the money a life insurance carrier pays to the beneficiary when the insured dies. It is usually paid as a lump sum and is generally income tax free to the beneficiary.
Convertible Term: Convertible term is term life insurance that lets the owner switch to a permanent policy without a new medical exam. The conversion must happen within a set period and follows the carrier's rules.

All 241 terms

Why it matters

Where we use this term

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