What are your recommendations concerning Decreasing Term Life Insurance?
Answers | 4
i don't recommend any kind until to know why you want to buy life insurance , what is your debt, what is your income, how many are depending on your income,and ..........
Decreasing term was originally and still today used by bankers to insure that their borrowers debt would be paid off should they die. The debt is typically a home loan. The death benefit decreases at the same or similiar rate to the declining balance owed. I do not recall if the premium is reduced at the same rate or at all for that matter.
Usually, decreasing term insurance is not your best approach. Here is why: the cost will usually remain constant, but the death benefit will reduce. Also, the beneficiary is usually not someone that you choose since the coverage mostly protects against the mortgage company's loss due to your early demise. Even if the cost were made to decrease over time, you will find that (unless your health is seriously impaired) the cost for garden variety life insurance is competitive against mortgage life insurance - but without the decreasing elements and the limitation on choice of beneficiary.
Well, it is actually very hard to find decreasing term life plans these days. Outside of credit life plans on purchases, you don't see them available for purchase. Usually DTPs are best suited for people who can't get any other insurance as they fit the beats a poke in the eye with a sharp stick concept. Usually priced in such a way to account for poor health, these policies tend to be more expensive than what a healthy person would pay elsewhere.