Which statement about decreasing term is true?

Which statement about decreasing term is true?

• A. The death benefit remains level throughout the term.
• B. It increases as the loan balance decreases.
• C. The death benefit decreases with time while the premium remains level.
• D. It is never used for mortgage or credit protection.

Answer: (C)

Decreasing term life insurance has a level premium throughout the term, but the death benefit declines over time to align with a decreasing obligation, such as a mortgage. This means as the loan balance goes down, the amount the policy would pay out also goes down. That’s why the true statement is that the death benefit decreases with time while the premium remains level. It’s commonly used for mortgage or credit protection, so saying it’s never used for that is inaccurate. The other ideas describe level term (death benefit stays the same) or an increasing benefit (which isn’t how decreasing term works).

Decreasing term life insurance has a level premium throughout the term, but the death benefit declines over time to align with a decreasing obligation, such as a mortgage. This means as the loan balance goes down, the amount the policy would pay out also goes down. That’s why the true statement is that the death benefit decreases with time while the premium remains level. It’s commonly used for mortgage or credit protection, so saying it’s never used for that is inaccurate. The other ideas describe level term (death benefit stays the same) or an increasing benefit (which isn’t how decreasing term works).