What is a key feature of a decreasing term insurance policy?

A key feature of a decreasing term insurance policy is that it provides a decreasing death benefit over time. This means that as the policyholder ages or as time passes, the amount that would be paid out in the event of the policyholder's death gradually diminishes. This type of insurance is often utilized for specific needs, such as covering a mortgage or other types of debt that decrease over time, ensuring that beneficiaries receive a death benefit that aligns with the decreasing financial obligation.

In a decreasing term policy, as the principal amount owed decreases, the death benefit provided by the insurance also decreases. This structure can make these policies more affordable than level term policies, as the risk to the insurer diminishes along with the benefit. This characteristic suits the needs of individuals who anticipate a decline in their financial responsibilities or liabilities throughout the duration of the policy.