Many people choose to take out a life assurance policy in order to protect their loved ones from the hardships endured by the loss of income after a family member passes away. This concern is especially true for those that are the main breadwinners of a family. But choosing the best life insurance policy for a persons specific needs is not always easy as the market can often seem saturated with choices. One of the most popular policies is called decreasing term life insurance. A decreasing term policy is ideal for certain people, although at the same time some find it overly confusing and thus opt for a simpler alternative. This situation is unfortunate, as in many cases a decreasing term policy could actually provide better coverage for a persons family in the event of that persons untimely demise. To make sure those who could most benefit from a decreasing term policy are aware of how such policies work, this article will look at what decreasing term life insurance is and how individuals can go about comparing the different plans available to them.
A decreasing term life policy is much easier to understand than many people suppose. Over the course of the policy, the amount the policy will pay out upon the policyholders death decreases. Thus, if the holder has a thirty year policy, that policy may pay out a large amount if it is claimed within the first five years of the term, but it will pay out significantly less if the claim is made within the last five years of the term. As such, these policies are ideal for a family that is working to pay down a large purchase such as a mortgage or student debt. Indeed, decreasing term policies are often referred to as mortgage life insurance. Some mortgage providers will even require the mortgage applicant to take out such a policy so that the claim will be able to cover whatever cost is leftover on the mortgage upon the applicants death. In many cases, the life insurance policy cover is directly linked to the amount still owing on a mortgage. For those who are on an interest only mortgage, whereby only the interest is being paid and not the capital, then a decreasing term policy is unlikely to be appropriate.
Finding the best decreasing term policy
If a decreasing term policy seems right for a persons needs, then that person must first decide on what is most required from such a policy. Typically, the most important consideration will be the length of term expected from a policy. Deciding on whether a twenty year or a fifty year term is needed will significantly narrow down the choices and thus make the process of choosing easier. Once the term is settled on, the next important consideration will be the cost of the policy. Premiums can differ enormously between different providers, but it is possible to bring those premiums down. Many providers offer special rates for those who apply online, and, of course, healthier living is always a sure way of paying lower premiums. Taking out a life insurance policy is one of the best reasons a person could have for finally quitting smoking and it could also save a lot of money in the long run. Finally, the amount of cover offered by a decreasing term plan will be another important consideration. If the plan is only being used to cover the cost of a mortgage, then it is a good idea to have that policy linked with the rate of the mortgage. But if an applicant is looking for a policy that will also provide extra income for surviving family members, then more cover is going to be needed. In some cases a fixed term insurance policy may be a better idea, although it will also likely cost more in premiums.
Finding the right life assurance policy to help protect a persons family requires research and patience. The most important step potential policyholders can take when finding the right policy is knowing precisely what their familys financial situation will be like if the policyholder were to pass away unexpectedly. Therefore, having a decreasing term policy that is not only cheaper but also changes as an individuals financial situation develops will be an ideal choice for many people.
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