Decreasing Term Life Insurance

Decreasing term life insurance offers death benefit coverage that declines over time according to a predetermined rate. You will usually pay consistent premiums, but the money your family receives from the death benefit gets smaller until your policy expires.

Rachel Christian, writer and researcher for RetireGuide
  • Written by
    Rachel Christian

    Rachel Christian

    Financial Writer and Certified Educator in Personal Finance

    Rachel Christian is a writer and researcher for RetireGuide. She covers annuities, Medicare, life insurance and other important retirement topics. Rachel is a member of the Association for Financial Counseling & Planning Education.

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  • Edited By
    Matt Mauney
    Matt Mauney, Senior Editor for RetireGuide

    Matt Mauney

    Financial Editor

    Matt Mauney is an award-winning journalist, editor, writer and content strategist with more than 15 years of professional experience working for nationally recognized newspapers and digital brands. He has contributed content for,, The Hill and the American Cancer Society, and he was part of the Orlando Sentinel digital staff that was named a Pulitzer Prize finalist in 2017.

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  • Financially Reviewed By
    Eric Estevez
    Eric Estevez, Independent Licensed Life Insurance Agent

    Eric Estevez

    Owner of HLC Insurance Broker, LLC

    Eric Estevez is a duly licensed independent insurance broker and a former financial institution auditor with more than a decade of professional experience. He has specialized in federal, state and local compliance for both large and small businesses.

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  • Published: August 20, 2020
  • Updated: July 25, 2022
  • 3 min read time
  • This page features 4 Cited Research Articles
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How to Cite's Article

APA Christian, R. (2022, July 25). Decreasing Term Life Insurance. Retrieved July 15, 2024, from

MLA Christian, Rachel. "Decreasing Term Life Insurance.", 25 Jul 2022,

Chicago Christian, Rachel. "Decreasing Term Life Insurance." Last modified July 25, 2022.

What Is Decreasing Term Life Insurance?

Decreasing term is a type of term life insurance. The death benefit shrinks over the life of the policy, but your premiums are usually fixed and consistent.

This contrasts with the most popular type of term life insurance, level term, which offers consistent premiums and a fixed death benefit.

Decreasing term life insurance may be appealing if you are looking for coverage while you pay off a major loan, such as a mortgage.

The idea is that your family may not need as much money once the mortgage — or some other major loan — is almost paid off.

Likewise, when you take out a mortgage, the bank may offer you something called mortgage protection insurance. This is actually a decreasing term life policy, but instead of paying money to your beneficiary, the death benefit is paid directly to the mortgage company.

Decreasing term policies may offer lower monthly premiums than level term policies — but not always.

Level term is much more popular than its decreasing term counterpart. Some life insurance companies don’t even offer decreasing term policies.

Benefits of a Decreasing Term Life Policy

Cost is one of the biggest benefits of decreasing term life insurance.

These policies tend to feature more affordable premiums than level term policies, since the death benefit gets smaller over time.

However, keep in mind that while decreasing term policies may feature a lower initial price, you are still required to pay the same premiums, even though the plan provides less coverage down the road.

If you want insurance to cover debts, loans or other major financial responsibilities, decreasing term life may suit your needs.

Decreasing term life insurance can be used to cover debts, including:
  • Mortgages
  • Auto loans
  • Personal loans
  • Business loans

Alternatives to Decreasing Term Life Insurance

Level term life insurance policies may be a better option if you want a consistent death benefit for your family.

You can purchase a level term policy, and always decrease your coverage amount later so that the face value shrinks as you pay down corresponding debts.

Plus, if you reduce the face value of a level term policy, your premiums will also go down. Premiums for decreasing term life policies, in contrast, don’t get smaller as your coverage shrinks.

Another option is to use the ladder strategy. In this case, you purchase a few different level term policies and stagger them so that coverage expires at different times.

The ladder strategy may result in lower premiums when compared to purchasing a single level term policy.

For example, a 35-year-old woman may need $300,000 of life insurance coverage but knows she won’t need as much coverage in the future.

If she buys a $300,000 level term life insurance policy for 30 years, she could pay $9,000 over the life of her policy.

However, if she uses the ladder strategy, she could purchase three different level term policies for $100,000 each and stagger them to last 10, 20 and 30 years.

Doing so could cost her just $6,500 over 30 years, or about $2,500 less than buying one large policy.

Last Modified: July 25, 2022

4 Cited Research Articles

  1. Chorpenning, A. (2020, April 20). The Keys To Mortgage Life Insurance. Retrieved from
  2. Danise, A. (2019, December 23). Choose the Right Term Life Insurance. Retrieved from
  3. American Council on Life Insurance. (n.d.). Types of Life Insurance. Retrieved from
  4. Life Happens. (n.d.). Term Insurance. Retrieved from