Decreasing Term

Decreasing term life insurance is a form of term coverage in which the death benefit declines over the policy period — typically in proportion to the outstanding balance of a mortgage or other amortizing debt. Premiums generally remain level while the death benefit steps down annually or monthly. Mortgage protection insurance is the most common application. Because the insurer's risk decreases as the benefit declines, these policies can be less expensive than level term per dollar of initial coverage. However, level term policies are often considered more versatile, as the death benefit remains constant regardless of the remaining mortgage balance.