What is the difference between level term and decreasing term insurance?

The distinction between level term and decreasing term insurance primarily hinges on the benefit structure provided by each type of policy. Level term insurance offers a fixed death benefit amount that remains consistent throughout the life of the policy. This means that if the insured passes away at any point during the term, the beneficiaries receive the same predetermined amount.

Conversely, decreasing term insurance is designed with the benefit amount reducing over time. Typically, this reduction is aligned with a specified schedule, and the death benefit decreases to reflect the diminishing financial responsibilities or needs of the insured, such as paying off a mortgage or other debts.

In summary, the key difference lies in how the benefit amount is structured: level term insurance maintains a constant benefit while decreasing term insurance sees a gradual decline in the benefit provided throughout the policy term. This understanding helps in assessing the appropriate insurance product based on individual financial needs and responsibilities.