Which statement about decreasing term life insurance is true?

Which statement about decreasing term life insurance is true?

• A. Both the death benefit and premiums decrease over the term.
• B. The death benefit decreases over time, while premiums remain level for the term.
• C. Death benefit remains level, and premiums increase.
• D. The death benefit decreases, and premiums increase over time.

Answer: (B)

Decreasing term life insurance is structured so that the death benefit declines over the term to match a need that shrinks over time (like a mortgage balance). The premium, however, is level and remains the same throughout the term, making the policy affordable and predictable year after year. So the true statement is that the death benefit decreases over time while the premiums stay level for the term. The other descriptions don’t fit this standard setup: either the premium changes as the benefit declines, or the benefit stays level, which isn’t characteristic of decreasing term.

Decreasing term life insurance is structured so that the death benefit declines over the term to match a need that shrinks over time (like a mortgage balance). The premium, however, is level and remains the same throughout the term, making the policy affordable and predictable year after year. So the true statement is that the death benefit decreases over time while the premiums stay level for the term. The other descriptions don’t fit this standard setup: either the premium changes as the benefit declines, or the benefit stays level, which isn’t characteristic of decreasing term.