Term life insurance policies offer insurance coverage to the beneficiary of the policy for a limited time (term).
For example, a term life insurance policy with 20-year coverage will offer benefits to beneficiaries of the policy for 20 years, no more or less. The policy will entail leveled premiums, and the death benefit will remain the same.
Decreasing term life insurance policies, on the other hand, offer death benefits that decline over time. Therefore, the premium that entails a decreasing term life insurance policy also decreases as time passes.
The death benefit payout amount and premium amount will be set when the policyholder is purchasing the policy. The terms may or may not be finalized by the insurer or the insured. If one feels convinced already, they can buy decreasing term life insurance here,or they can continue reading to learn more.
The Theory Behind The Idea
Understanding decreasing term life insurance can begin when a person learns about the theory that led to the development of this insurance product.
The theory is as follows –
As people age, their need for comprehensive life insurance coverage decreases as their liabilities reduce over time; hence, investing in a comprehensive life insurance policy makes no sense. It only adds to the financial burden as a comprehensive life insurance policy entails hefty premiums.
Why Invest In A Decreasing Term Life Insurance?
There are many reasons why people choose to apply for a decreasing term life insurance policy. Some of the most compelling reasons are enunciated in the sections below –
- Decreasing term life insurance policies offer policyholders the benefit of protecting their assets.
- The primary applicants of decreasing term life insurance policies are managers of small enterprises who can mitigate their operational expenses and steer clear of hefty business loans.
- Decreasing term life insurance policies can also help business partners. For instance, if one among two business partners dies, the proceeds from the decreasing term life insurance policy can then be used by the surviving business partner to ensure the continuity of the enterprise. In addition, the decreasing term life insurance proceeds can also be used by the surviving partner to settle the debts (if any).
- It is also the most affordable insurance product available these days, especially when one compares the premiums of whole or universal life insurance policies with decreasing term life insurance policies.
- Another hard-to-ignore benefit of decreasing term life insurance policies is that these policies offer death benefits minus cash accumulation. Furthermore, the premiums for decreasing term life insurance policies are modest, to state the least, especially when one pays close attention to the benefits such insurance policies offer to policyholders.
Conclusion
Decreasing term life insurance policies should be applied only after one has sufficient knowledge about the intricate terms stated in the fine print that entails the policy. Unfortunately, this post is insufficient to enunciate the intricacies of term life insurance policies. Hence, for the best results, it is strongly advised that one consults with a reputed financial advisor before making up their mind.