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Life Insurance

Decreasing Term Life Insurance: How It Works and Cost

Decreasing term life insurance is a term life policy whose death benefit drops on a fixed schedule over the life of the policy, typically aligned with a declining obligation like a mortgage payoff or business loan. Premiums are usually level, not decreasing, despite the falling death benefit. Decreasing term is much less common in the U.S. retail market than level term because the premium savings are typically small and the buyer is exposed to a coverage shortfall if the underlying obligation is paid down slower than the schedule assumes.