Compared to level term, decreasing term has which characteristic?

Compared to level term, decreasing term has which characteristic?

• A. Higher premiums with a decreasing death benefit.
• B. Equal premiums and increasing benefits.
• C. Lower premiums with a decreasing death benefit.
• D. Higher premiums with level benefits.

Answer: (C)

Decreasing term is set up so the death benefit declines over the term, while the price you pay reflects that smaller payout. Because the insurer’s exposure drops as the benefit goes down, the premiums are typically lower than those for level term coverage. This arrangement fits situations like mortgage protection, where the amount you’d need to insure decreases as the loan balance falls. So the best description is lower premiums with a decreasing death benefit.

Decreasing term is set up so the death benefit declines over the term, while the price you pay reflects that smaller payout. Because the insurer’s exposure drops as the benefit goes down, the premiums are typically lower than those for level term coverage. This arrangement fits situations like mortgage protection, where the amount you’d need to insure decreases as the loan balance falls. So the best description is lower premiums with a decreasing death benefit.