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Benefits From Declining Balance Term Life Insurance Coverage

2010-03-20

There are several major types of life insurance, and there are dozens of slightly different variations. Some insurance types, like the standard "level" term life insurance, have fairly obvious benefits and drawbacks, but others can seem sort of pointless. For instance, declining balance term life insurance looks like a bad deal on its surface. The policy holder pays a steady rate for coverage, but the balance of the term life insurance policy payout keeps lowering until, at the end of the term, it hits zero. Declining balance insurance is meant for consumers who are trying to protect a mortgage or other major loan, and it's required by many banks before a loan is issued. The bank is named as the beneficiary in this special type of term insurance.

There are a few major advantages to this type of policy. The most obvious is that a declining balance comes with a lowered cost. Since the policy holder stands to benefit less from the payout of a declining balance policy as opposed to level insurance, premiums are significantly lower, and keep in mind that level term insurance policies are already fairly inexpensive. This doesn't mean that consumers can't benefit greatly from looking at several quotes, however, comparison shopping is still just as important with declining balance term insurance as it is with any other type of policy. Since coverage levels will start out the same regardless of the company you use for a declining balance policy, it can be very easy to compare one term life insurance quote to another in order to find the best possible deal.

Declining balance policies are also easier to set up and manage, since there are fewer variables. It's always important to read any part of your insurance contract that refers to exclusions, and the terms offered by one company may vary greatly from another, but policy holders don't have to worry about things like choosing beneficiaries or coverage amounts. Declining balance insurance can make it much easier to find a mortgage lender, and it's an especially popular choice among home buyers who are looking at a second or vacation home. If looking toward the future, then term life insurance is a viable option.

If you have any term life insurance questions, it's a good idea to read through our articles or to contact your insurance agent as soon as possible. Different types of insurance, like declining balance and convertible insurance, can seem confusing at first, but it's important to get all the facts before making a purchase. Term life insurance is a big purchase, but if you're able to research your options, it's easy to find an affordable policy that's right for you.

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