Understanding Increasing and Decreasing Term Life Insurance

Life insurance is one of the most important purchases that you can make for you and your family. At Longevity Brokers, we are proud to provide quality life insurance policies to the Denver, Colorado area. The two main types are term and whole life, but there are several different sub-sets of those policies. There are dozens of different policy types that you can choose from, all of them have different advantages and disadvantages that you have to consider to ensure that you’re making the best decision to protect your family.

Everybody is different, and everyone has varying preferences and needs for their life insurance protection. One of the common questions we get is, “which policy is best for me?” while we can’t make the decision for you, we can get you the knowledge and answer any question you have. One of the common policy types that we receive questions about is increasing and decreasing term life insurance. We will explain these policies and help you decide if they fit your insurance needs.

What is Increasing/Decreasing Term Life Insurance?

The idea behind both increasing or decreasing term life insurance is simple, as people’s lives change, so does their life insurance needs. With an increasing term life insurance policy, every year, the death benefit from the plan is going to increase. A decreasing term insurance plan is the opposite, every year the coverage amount is going down. As the coverage amount changes, so does the monthly premiums.

For a decreasing policy, people purchase these plans with mortgages in mind. Applicants that buy these intend to match the amount of their coverage to their mortgage loan, and as their mortgage goes down, so will their insurance coverage. If a mortgage is the only reason that you’re looking to get life insurance solely to coverage your mortgage, these policies could be an excellent fit for you.

Increasing term life insurance policies are much less common than the other types of term insurance. There are few examples of when these policies would fit your need, but one of those is if you plan on having a child in the future, but would like to save the money now you could consider an increasing term life insurance plan.

Are these policies right for you?

Deciding which policies are best for you can be difficult. There are dozens of different aspects that you have to consider to make the best decision for your life insurance needs.

If you have children that will eventually have their own jobs, or you want insurance coverage to cover any loans, then a decreasing insurance policy could be a great option for you. As the coverage continues to decrease, so will your premiums, which means you’ll be saving money. This is an excellent way to prevent paying for more coverage than you need.

As we mentioned earlier, there are only a few rare cases that increasing term life insurance policies will fit your needs, but if you see your need for life insurance drastically increasing in the next 5 – 10 years, you can save money now, but still get the coverage that you need in the next few years.

How much Insurance Coverage do you need?

One of the important factors that you need to account for, is how much coverage do you need? It’s vital that you get enough coverage for your loved ones to give them the resources they need if anything tragic were to happen to you. How do you know how much insurance to buy? There are several factors to consider.

The first is your debts. Before you purchase an increasing, decreasing, or traditional term insurance policy, calculate all of your unpaid expenses and any other debt that would be left to your family if you were to pass away. If you passed away, your family would be responsible for paying all your debt and any final expenses like funeral costs or medical bills. All of that can quickly add up and put your loved ones under financial strain.

The other factor you need to consider is how many people rely on your income? If you have kids and a spouse that depend on your salary, they will experience financial strain if you passed away. They would struggle to find a way to replace your income, especially if you left them with a pile of debt. As your kids move out of the house, you have fewer people relying on your income (this is a scenario where decreasing term life insurance can be useful), but does your spouse still need that salary? There is no “magic number” for how much life insurance coverage you should get, but we suggest getting around 7-10 times your annual salary.

Getting Quality Life Insurance

Life insurance is just one of the several insurance products, along with auto and homeowners insurance in Denver, CO that we offer. If you have any questions about increasing/decreasing term insurance, or any questions about life insurance in general, we would be happy to answer those questions for you.

Every year countless families lose a loved one unexpectedly. On top of the emotional grief that they are suffering through, they also find themselves with thousands and thousands of dollars of debt. This makes an already difficult situation even harder for a family. Don’t let your family become one of those stories.

Contact us today and we can help you get the life insurance coverage that your family deserves. Call us at (720) 209-4598 or use the contact form and we can help you get affordable and quality life insurance.

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