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Decreasing Term Life Insurance

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Decreasing Term Life Insurance, or Mortgage Life Insurance as it is frequently referred to, offers coverage to protect remaining family members and pay off large loans on items such as houses, businesses and any other loans where payments decrease over the years.

How Decreasing Term Life Insurance Policies Work

  • When the individual policy holder passes away during the time the policy is in force, the policy pays out a lump sum to the named beneficiary. This type of policy is designed to decrease in coverage over the years in line with the amounts owed on loans, usually a mortgage.

  • The addition of coverage for illness extends the scope of any Decreasing Term Life Insurance policy.

  • The monthly payment remains the same for the term of the policy.

  • If the policy holder remains alive at the end of the term of the policy, no payment is made.

Optional Extras which may be added to Decreasing Term Life Insurance

It should be noted these additional options vary from company to company. Any questions arising should be asked and full answers received before any policy is entered into. These extra features do come at a cost, but may be worth the extra premium since some offer a lot more coverage for relatively small increases in payments.

  • The critical illness provision pays a lump sum if and when you are diagnosed with a qualifying illness

  • If you should be diagnosed with a terminal illness, the policy should pay out a lump sum early enough to permit the proper arrangement of your financial affairs.

  • Adding an option known as, “Waiver of Premium,” means that should illnesses prevent you from working at your usual employment; the monthly payments are covered by the policy, after a set qualifying time.

  • An alternative to “Renewable Premiums,” are “Guaranteed Premiums”, where the amount of monthly payment you make stays the same throughout the time a policy runs. “Renewable Premiums,” are reviewed approximately every five years, which usually is followed by an increase in payments.

Who can be insured with Decreasing Term Life Insurance?

There are three main options to who is insured on a Decreasing Term Life Insurance policy. Each offers unique benefits to the policy holder. Which one is best for you can be determined by consultation with your family members and Insurance provider.

Single Life Decreasing Term Life Insurance

The policy ends in payment on the death of the holder. This option is often used to protect the remaining spouse or family members by ensuring sufficient funds are available to pay off the mortgage and cover their expenses.

Joint Life, First Death Decreasing Term Life Insurance

This policy expires when he first policy holder covered dies, protecting the other from debt by providing a lump sum to meet expenses. It may be used to cover funeral expenses or large loans.

Joint Life, First Survivor Decreasing Term Life Insurance

This policy will pay out a lump sum on the death of the second policy holder, and is often used as a way to transfer wealth in the form of inheritances.

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