Decreasing Term Life Insurance

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Decreasing Term Life Insurance

Term Insurance provides life insurance coverage for a specific period of time. Presently, one year, five year, ten year, and fifteen years, are the periods one can buy term life. If the insured dies during the period the insurance is in force, the insurance company pays off the face value of the policy. If the insured lives longer than the term of the policy, the policy is no longer in effect. Nothing is paid. The insured builds up no equity in a term policy.

Term life insurance is the least expensive form of life insurance. It is commonly used when the insured needs temporary protection or can't afford the premiums for the other forms of life insurance. The other reason an insured may want term insurance is to purchase life insurance and invest the difference between the term policy and a permanent cash value policy elsewhere. Many times an insured feels he can do better investing his funds elsewhere. This last strategy may or may not be the best for that particular individual. It may be possible to do. The insured may be able to get a far better return on his funds than he would with the insurance company. However, I don't recommend this last form of insurance purchasing and investing the difference elsewhere. I believe in keeping things simple. Buy the proper type of insurance coverage for you and forget about getting tricky. There's too much temptation to use the other proceeds for something other than life insurance protection.