How does a "level term" life insurance policy differ from "decreasing term" insurance?

A level term life insurance policy is designed to provide a consistent death benefit that remains the same throughout the duration of the policy. This means that regardless of when the insured dies within the term, the beneficiaries will receive the agreed-upon death benefit amount. This stability is a defining feature of level term insurance, making it a predictable and reliable option for those looking for financial security for their loved ones.

In contrast, decreasing term life insurance is structured to provide a death benefit that gradually diminishes over time. Typically, the benefit is designed to reduce in line with certain obligations, such as a mortgage, where the coverage decreases as the principal balance of the loan is paid down. This type of policy is often less costly than level term options since the risk to the insurer decreases as the term progresses and the coverage amount declines.

Understanding these key differences is crucial for individuals when selecting a life insurance policy that best meets their financial needs and goals.