Decreasing Term Life Insurance is where the sum assured decreases over the term of the policy. It is typically purchased by people looking to protect their repayment mortgage in the event of death, although it can be used to protect the repayment of a reducing debt – such as a loan, or school fees etc.

Decreasing term is one of the least expensive forms of life insurance because the odds are in favor of the company. You can purchase a very high face amount for a very low price. Each year that face amount drops although your premium remains level. Long before the end of the term, the face amount is cut in half. And by the time the term expires, the face value is zero

The decreasing term life insurance provides coverage at lowest possible premium therefore, the income of the family does not matter much. So one can take out a joint life insurance policy as a survivor and receive lump sum payment. This insurance policy is s not expensive for non smokers and women as the death rate at early age is lower in such categories. Pre existing medical condition are excluded from this policy.

Mortgage life insurance policies have one clear objective – to help pay off an outstanding mortgage in the event of death, during the policy term. This means that your loved ones could continue to live in the family home even if you’re no longer with them, without worrying how they’ll pay the mortgage.

Mortgage life insurance pays out a lump sum when the policy holder dies. There are also plans that pay out if the policy holder gets a covered critical illness or accident and is unable to work. The purpose of the plan is to provide money so that the mortgage loan can be paid off, which is especially critical if only one of the partners on the loan is a wage earner. Decreasing mortgage life insurance plans are term plans and are set up to decrease over the life of the policy.

If you have a large mortgage or other large debt, many banks will require that you protect the investment with some type of insurance, and they will usually offer mortgage, i.e. decreasing term insurance. Fortunately, there is a better way.

Most term life insurance policies sold in Canada are level-term plans, meaning that the premiums are fixed for a stated term and the coverage is also fixed for that term. By contrast, decreasing term life insurance policies have a level premium for the stated term, but the coverage goes down during the term of the policy.

Generally speaking, this type of coverage is recommended for situations like the one described above – where there is an amortized liability and the client has cash flow concerns that would prevent the purchase of a level policy.  For younger Canadians a level policy tends to be very affordable and the additional insurance resulting from the decreased liability each year is helpful as people deal with new insurance needs, throughout the various stages of life.

If you have further query please contact Canada Insurance Plan.