Decreasing term life insurance isn’t decreasing term life insurance coverage to reduce premiums. Decreasing term life insurance is a form of term life insurance. For those familiar with term life insurance they are more likely to know about the level term insurance that is a set payout amount guarantee upon an insured’s:

• Death
• Critical Illness
• Permanent Disability

Rather, the amount of the payout is going to decrease, often on a per annum basis, the premiums, however, are going to stay the same.

Good Idea

It may not seem like it but there are actually some good reasons to purchase a decreasing term life insurance policy.

1. If cost is an issue than it’s going to be less expensive than the level term life insurance policies and for those that don’t have the money to pay for life insurance this will give those people an opportunity to purchase and have protection
2. Also, if the main goal of your is to make sure that the mortgage is paid should you die than the decreasing term life insurance might be a good option as it will usually have a mortgage payout in the terms of the policy

Bad Idea

Even though the decreasing term life policy is going to be less expensive critics say that it could end up being more expensive in the end. If the insured leads a long and healthy life it’s going to have an eventual deprecation to nothing. If you should outlive the policy there is nothing to show for your continued payment with lessened benefits.

Unlike other life insurance policies there is money invested and the life insurance will mature; however, with the decreasing term life insurance policy there is no life insurance policy maturity as there are no invested monies.

It’s a gamble for a temporary type of protection that might have some short term benefits but run you into an investment of a lot of cash for zero return on your investment.

The Other Hand

Making payments for insurance that will at least make sure that your mortgage is paid off should you die will ensure that those that survive after you will not have the responsibility of figuring it out. This is one of the biggest concerns to people and it can help with a lot of relief should the worst happen.

It’s important to bear in mind that even though the amount is going to go down over the life of the policy having the house paid off and not having to either sell because they can’t afford it or having to go back to work immediately after your passing can be a comfort to those that have lost you, especially when it comes to young families that aren’t expecting anything to happen.

In this instance it would be really hard for most of the families to keep going because most couples starting out have to make a dual income to keep payments up, an untimely demise would destroy this without having a fallback plan which would be the decreasing term life insurance as the cost is so much lower. Once you get into a better position you could look towards a better life insurance plan; such as level term or whole life, etc…

Evaluations

When you’re making the determinations for your life insurance needs, and especially if income is a big concern, you need to think about what your baseline needs are should you pass away or should you become permanently disabled.

If you don’t owe very much on your mortgage than something like decreasing term life insurance wouldn’t be a wise investment for you to make as you’ll get nothing out of it. In this instance you should look for something that has stability when it comes to a possible payout and one that is not going to decrease over the life of policy. Even if you have to take less of a benefit to decrease your premium payments until your financial situation changes this is still the better choice.

When in doubt seek counsel from a licensed life insurance representative, agent. They will be able to walk you through everything and discuss premiums and give you multiple quotes on those different policies that are available to you so you can find something that is going to meet the needs and stay within budget.