There are many people out there who do not have life insurance policies because they believe they cannot afford them. However, there is a type of policy that does offer good benefits over a specific period of time with low premiums called decreasing term insurance. This article will describe what this type of life insurance policy is, the advantages that it offers, who is it meant for and how to find the best types of these particular policies.
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What is Decreasing Term Life Insurance?
This is a type of renewable term life insurance that provides a death benefit which will decrease at a predetermined rate. This rate will depend on the overall length of the policy itself with premiums that remain constant.
This is a very flexible form of term life insurance with typical policies that last from 1 to 30 years in general.
The idea behind this form of term life insurance is that a person over time will not need the high levels of benefits later in their life and certain types of liabilities will no longer exist. You can find a substantial portion of this type of life insurance in mortgage life insurance policies which ties its benefits to the remaining amount that is due on an insured residence.
In fact, many mortgages will have this type of policy in-place to ensure that the loan is fully paid off if something unexpected should happen. However, this form of insurance can also be purchased separately to help cover expenses just in case something should happen to the breadwinner of the family.
What are the Advantages of this Type of Life Insurance?
The advantages of decreasing term insurance start with the fact that the premium levels are usually quite low and very affordable. This means that a person with a low to moderate income can purchase this form of insurance early in life while paying a low amount on their premiums. For example, a person can purchase a 20 year decreasing term policy where the premiums are locked in for that time period. Or, they can purchase one where the premiums get cheaper as the policy ages.
This form of life insurance is a great way to ensure that any large loans such as a mortgage are paid off in full in case the unexpected should happen. This is why many decreasing term policies are often tied to mortgages which make the perfect match as the amount due and the policy benefits decrease at the same rate.
Another advantage is that the benefits are paid to beneficiaries and not the bank. This makes it more flexible for family members to ensure that all the loans are paid off, but anything leftover can be used for other expenses. In fact, there is no actual obligation that the money must be used to pay off the loans, although in the vast majority of cases this is what happens.
It is important to remember that there is no cash surrender value for this particular type of policy. So, if a person decides to terminate the policy before the end date, there is no payout of what has been collected in terms of the premiums. In addition, such policies for the most part require a medical exam that provides the insurance company the assurance that the person is in good health and is expected to live at least for the first few years that the policy is in place.
Who Should Get this Policy?
This form of life insurance is very popular and usable for a large number of people. A decreasing term policy is perfect for people on a limited income, especially young people who are just starting out in their life and believe that life insurance policies are beyond their income level. This is especially true for young families that have just purchased a home and are paying down on a mortgage.
This form of insurance is also advantageous to those who are on a low income whether they have to pay a mortgage or not. This type of policy can cover funeral expenses, debts and other expenses so that the family is spared the burden. In this manner, a struggling family does not have to be in a deep financial hole because the breadwinner has passed away. In fact, this policy can leave a legacy behind to help the family rebuild and regain their financial footing which can offers great benefits and brings about peace of mind.
Who Should Avoid this Policy?
However, this form of term life insurance is not advisable for those who have no other type of life insurance policy, especially if the person is getting towards middle age. This is because as the benefits decrease over time and the coverage may not be quite high enough later in life to cover all expenses. It is actually expected in this type of policy that individuals and families will increase their income over time and add new forms of financial protection.
Finding Decreasing Term Life Insurance Quotes Online:
If you are interested in obtaining a decreasing term insurance policy, then the best way to start is by shopping around for a free quote. You can call us or ask for free quotes online. Many life insurance companies will offer a free quote based on the information that you fill into their short form. Basically, this information is about the size of the benefit you want and the overall length of term for the insurance policy. Once all the information has been entered, you should receive a free quote back from the company. Once you receive a few free quotes, then you can make the best informed choice about which company you will obtain the policy.
For those who are interested in covering their expenses if the unexpected happens, but they do not have a large income, then a decreasing term life insurance policy is the perfect answer because it provides considerable benefits with very low premiums that may actually decrease as time goes on. For young families in particular, this is the perfect insurance policy to cover expenses.