When purchasing a decreasing term life insurance policy, you will have a number of options to consider. When determining which of these options is right for you, it is important to keep in mind that a decreasing term life insurance policy is meant to cover you for only a set amount of time. In addition, as with any life insurance policy, it only pays out if you pass away.
The amount of coverage you receive with a decreasing term life insurance policy changes over time. Most people purchase these policies in order to cover their mortgage payments. As such, the policy will be created to cover the outstanding balance of the mortgage loan. Since the amount of the mortgage loan will decrease over time, so does the amount the decreasing term life insurance policy covers.
Depending on the carrier, you will typically have five options to consider adding to your policy. These include:
With a critical illness option, you will be able to receive a lump sum payment if you are diagnosed with a critical illness. Of course, you will have to provide proof of your illness before the payment will be provided. In addition, if you receive a payment because of a critical illness, your beneficiary may not receive a payment in the event of your death. Be sure to clarify this in order to make sure you are getting the coverage you really want.
A terminal illness option is similar to the critical illness option, though it is more severe since it is more likely that your death will follow. Both the critical illness and terminal illness options are different from the waiver of premium option in that it allows your policy premiums to be waived for a period of time if you are unable to work for a period of time because of an illness.
With a guaranteed premiums option, you are guaranteed that the amount of your premiums will not change during the policy term. This is different from the more common reviewable premiums options, which means the company is allowed to review the amount of your premiums and to raise them if necessary on a periodic basis. In most cases, the premiums of a decreasing term life insurance policy do not change. To be on the safe side, however, you should be sure this is stated in your policy.
With the trust option, you can make sure there are no delays in the money being transferred to your dependence in the event of your passing. It also helps them avoid paying inheritance tax on your benefit.
In order to make sure your decreasing term life policy meets your needs fully, it is important for you to examine all of your options and to read the fine print. In this way, you can be certain your loved ones will be taken care of even if you are no longer there to help them along the way