You may know that there are two basic forms of life insurance, permanent insurance and term insurance. You may also know that permanent insurance is well, permanent as long as premiums are maintained. You may further know that term insurance is designed to cover the insured over a specific period of time or term. But did you know there are several types of term insurance policies? One of these is decreasing term insurance.
Decreasing term insurance provides coverage for the insured’s life for a specific period of years. The amount of insurance, however, decreases over that period. In what circumstances would decreasing term insurance be valuable?
Let’s say you have just purchased a home and have a significant mortgage on your house. If you have a 30-year mortgage, a 30-year-decreasing term life insurance policy could coincide with the amount you owe on your home until it is paid off.
Another example is those who have a young family. They could benefit from a large amount of life insurance to insure a certain standard of living and even take care of future college costs. In this situation, however, permanent insurance may not be affordable enough. A large 20 or 30 year decreasing term insurance would provide protection while you build up savings and a college fund. In 20 or 30 years, when you no longer need that much life insurance, your premiums and coverage would cease.
The attractive aspect of term insurance is that it is more affordable when compared to a similar amount of permanent insurance. This allows you to acquire as much protection as possible.
If you have a large amount of financial obligations and/or just want to provide as much protection as possible for a young family, decreasing term life insurance may be a viable option. We invite you to contact one of our independent life insurance specialists to learn more. You may be surprised at just how affordable life insurance can be. We look forward to assisting you.