Term Life Insurance Articles
The Advantages/disadvantages To A Decreasing Term Life Insurance Policy
2009-12-05
One of the lesser-known forms of term life insurance is the decreasing policy. This is a very specific policy type in which the possible benefits paid out to the beneficiaries actually decrease as the time left on the policy term also goes down. Benefits continue to diminish until they expire at the end of a set term (usually five, 10 or 30 years, depending on how the life insurance policy is set up). Decreasing term life insurance is actually a very popular policy type, although at first glance it may seem to be an almost contradictory form of life insurance.
The typical use of a decreasing term life insurance policy is to provide insurance for certain expensive property, especially when the policyholder takes on a debt in order to pay for that property. The bank, organization or individual who provided the loan to buy said property is declared as the sole beneficiary for the life insurance policy. This way, if the policyholder dies during the term of the insurance, the property will be paid off in full by the policy payout. It's a common form of coverage to get when obtaining a mortgage. This is especially true for older homebuyers who may be required by their mortgage company to purchase some form of life insurance.
Because the potential benefits of the policy decrease over time, this form of term life insurance typically costs far less than other types of policies (as there's less potential benefit for the policy owner). As with normal term life insurance, premiums paid into this type of policy are never returned to the policyholder, unless special circumstances have been arranged (which doesn't happen often). Decreasing term life insurance is not a recommended option for other circumstances where life insurance is needed. For example, if you're looking for a way to provide for your family if you should suddenly die, this form of insurance would not be a very dependable option for you.
If you're buying a home or another expensive piece of property, buying decreasing term life insurance coverage can make it easier to find a loan. It ensures that your death will not prevent a loan from being paid back, which is a substantial benefit for banks or credit unions looking to back your purchase. If you're buying this type of life insurance policy, however, you should be sure to check around to get the best deal possible on rates. As with other forms of term insurance, rates can vary greatly depending on the company that you use. Decreasing insurance is usually very easy to qualify for, and rates are extremely manageable, even for older buyers.
Free Insurance Quotes
One of the lesser-known forms of term life insurance is the decreasing policy. This is a very specific policy type in which the possible benefits paid out to the beneficiaries actually decrease as the time left on the policy term also goes down. Benefits continue to diminish until they expire at the end of a set term (usually five, 10 or 30 years, depending on how the life insurance policy is set up). Decreasing term life insurance is actually a very popular policy type, although at first glance it may seem to be an almost contradictory form of life insurance.
The typical use of a decreasing term life insurance policy is to provide insurance for certain expensive property, especially when the policyholder takes on a debt in order to pay for that property. The bank, organization or individual who provided the loan to buy said property is declared as the sole beneficiary for the life insurance policy. This way, if the policyholder dies during the term of the insurance, the property will be paid off in full by the policy payout. It's a common form of coverage to get when obtaining a mortgage. This is especially true for older homebuyers who may be required by their mortgage company to purchase some form of life insurance.
Because the potential benefits of the policy decrease over time, this form of term life insurance typically costs far less than other types of policies (as there's less potential benefit for the policy owner). As with normal term life insurance, premiums paid into this type of policy are never returned to the policyholder, unless special circumstances have been arranged (which doesn't happen often). Decreasing term life insurance is not a recommended option for other circumstances where life insurance is needed. For example, if you're looking for a way to provide for your family if you should suddenly die, this form of insurance would not be a very dependable option for you.
If you're buying a home or another expensive piece of property, buying decreasing term life insurance coverage can make it easier to find a loan. It ensures that your death will not prevent a loan from being paid back, which is a substantial benefit for banks or credit unions looking to back your purchase. If you're buying this type of life insurance policy, however, you should be sure to check around to get the best deal possible on rates. As with other forms of term insurance, rates can vary greatly depending on the company that you use. Decreasing insurance is usually very easy to qualify for, and rates are extremely manageable, even for older buyers.
