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Decreasing Term Life Insurance
While the majority of people are familiar with whole life insurance policies, many are not aware that there are a variety of other types of insurance policies. While more people have started looking at term life insurance policies because they are a low cost way of replacing income, decreasing term life insurance is even less expensive. Many young people starting out do not look into insurance policies because they believe that they are not affordable, but decreasing term life insurance is very inexpensive and can offer young people the ability to take care of their families if something should happen to them, or pay off debts they may have. If people have looked into mortgage insurance, they see that it is very expensive. An appropriate alternative may be a decreasing term policy. The death benefits decrease each year, along with the premium payments, as you pay down your mortgage. You can purchase a 20 year term life insurance policy where the premiums are locked in for 20 years, or one that gets cheaper each you own the policy.
In the tenuous economic times that we live in, not having insurance can quickly lead a family into dire financial trouble if something happens to a member of the household. Decreasing term life insurance policies allow people to purchase insurance over a set amount of time for a low and fixed monthly premium. Low cost policies such as these allow even low income families to provide for their futures, should anything happen to a member of a family.
Decreasing term life insurance is also a good way to ensure that any large loans, such as business loans or a mortgage, are paid off should something happen to the insured. This type of loan is most commonly attached to house payments, so that should the head of the household pass away, the home will be paid for. This takes a large financial burden off of the beneficiaries, and these policies can be set up so that the term matches the loan or mortgage length.
As the amount money owed on a loan or mortgage decreases, the payout of the insurance policy also decreases. However, no matter what point the insurance premium is paid out, it ensures that the total value of the loan or mortgage is taken care of. Additionally, while the goal of these premiums is to ensure that loans and mortgages are paid off, the payout is still given to the beneficiaries, not a bank. This means that family members are able to use payouts as they see fit and are not obligated to pay off any loans.
While this type of insurance policy does give people the ability to provide for their families, there are some limitations to these policies. To begin with, decreasing term life insurance premiums stay the same, but over the term of the policy, the payout amount decreases. However, the idea is that as the end of the term approaches, people will be making more money and better able to save and invest so that the lower payout amount will still be sufficient. Further, there is no cash surrender value for these types of insurance policies. If someone terminates the policy before the end of the term date, they do not receive any kind of payout. These types of decreasing term policy are usually not available in a no medical exam life insurance policy, meaning the insurance carrier will require you complete a paramedical exam to insure your health is good and you will live out the first few years.
There are few families that would be able to continue on without great financial difficulties if one of the working members of the household were no longer able to provide. Even if the both members of a household work, having income cut in half can prevent people from being able to pay bills and keep up with expenses. Therefore, it is critical that people have some sort of insurance policy to make up for the loss of income.
For people to find out what insurance policy is best and most affordable, there are a number of online insurance calculators that can show people what their premiums would be and the amount of money that an insurance policy can pay out. These calculators are simple to use and offer quotes from a variety of insurance providers