What is Decreasing Term Life Insurance and Does it Hurt or Help You?

There seems to be a ton of choices for life insurance, and many simply wonder whether to get a term or whole policy, but those who decide on going with term have even more choices to deal with. Term doesn't just come in one form, and the most prominent type being decreasing term life insurance.

Decreasing term life insurance is not easy to understand at first, but with some simple explanations it should all become clear.

In exchange for a fixed and low premium rate, the amount of coverage actually goes down year by year.

So say you take out a five year policy for 15,000 dollars. After the first year, in most cases your coverage will decrease by the sum of the coverage divided by the years the policy is for. So with a 15,000 dollar policy over a five year period, your coverage will go down by 3000 dollars each year -- year two will be 12,000, year three will be 9,000 and etc..

One may debate the usefulness of decreasing term life insurance, but it is extremely useful for covering children or persons who are or may soon be in critical health condition. Of course, there is the common need for security that many people fulfill by taking out a life insurance policy. So there are uses for it, but deciding on decreasing term life insurance should be chosen in only special circumstances or in times of financial instability due to the extremely low costs.

But how do you find rates for decreasing term insurance? You could run a search through your preferred search engine to find sites who scan insurance companies and their rates. But the preferred method of receiving decreasing coverage is to have a physical consultation with an insurance agent, for a few reasons.

Requesting the services of an insurance professional give you the information and the opinion you need to decide whether decreasing is the type of life insurance you need. Once determined, you will be given a wide variety of choices of providers and their coverage plans as well as their rates. Doing it online is simple, but receiving the assistance of a human being who is experienced in the field can not be replaced.

If you do enter into a decreasing term life insurance policy, take care not to forget the rate at which the insurance's benefit climbs down. Forgetting could leave your loved ones in an even worse situation should you have an accident.

Walter Sigmore, "Term Life Insurance", Term Life Insurance Guide and Resources