Decreasing Term is another option available when a level term
reaches expiration date, but is sometimes purchased as decreasing
from the start. The premium usually remains constant—or
level, but the face value drops a bit every year, with these decreases
becoming more radical over time. When a level term reaches the
end of the initial term, a policy owner can choose decreasing
term rather than annually renewable, and thereby keep the premium
payments the same.
often use decreasing term, with the face value of the insurance
dropping yearly with the principle of the mortgage note. When
the face value reaches 0, the insurance simply ends. Decreasing
term may also be used by business partners who need to cover investment
or startup costs which will be absorbed as the business grows,
thereby reducing the need for the insurance.
Joint term is one policy used to cover two or more people. It
is often used to protect the family against loss due to the death
of a primary wage earner, or to create a means to pay off a mortgage
or other debt in the even of the death of either of the insureds.
Term is used because at the end of the term—be it 10 or
20 years—the insurance will no longer be needed. Furthermore,
if one person dies, the proceeds are used to pay the debt, which
also eliminates the need for the insurance. In using a joint policy,
the owners pay a single premium based on the average age of the
two. This premium is always less than having two separate policies.
Survivor term is sometimes called "second to die" and could actually
be purchased as whole life rather than term. It is used to cover
business partners for a needed time period, to provide an income
for a family member when the second insured person dies, or to
establish a legacy or endowment gift for a favorite charity. It
covers two or more people with one premium and pays when the last
insured dies. It is also assumed that when either the term expires
or the last insured dies, the insurance will no longer be needed.
When to buy