Life Insurance with Diminishing Death Benefit?

[TBACON]

Is there such thing a life insurance with a diminishing benefit?

This is what I have in mind - the premium starts out high and the benefit starts out high, then with each year the premium goes down and the death benefit goes down as well.

Thanks in advance!

 

[STIBROKER]

pretty sure decreasing term has been off the market for years......

 

[WinoBlues]

Is there such thing a life insurance with a diminishing benefit?

This is what I have in mind - the premium starts out high and the benefit starts out high, then with each year the premium goes down and the death benefit goes down as well.

Thanks in advance!

Not really.

You may be able to structure a Universal Life policy to do this. However, you will have to request the reduction each year. It also may play havoc with your guarantees. Not sure if there would be much dollar savings.

Same with the new ULTerm policies.

I assume you realize the risk to the company goes up as you age.

Question: Why would you want to do this?

Lee

Edit: You could also ladder multiple term policies.

 

[TBACON]

Not really.

I assume you realize the risk to the company goes up as you age.

Yes, I figured that their risk would be offset by the lower death benefit.

Question: Why would you want to do this?

Because my needs shrink every year that I am alive and earning. It seems silly to me that I should pay to have a $1mm benefit when I only need that benefit if i kick it this year. if i can last another 10 years then I will only need half that amount.

Edit: You could also ladder multiple term policies.

Please elaborate!

 

[WinoBlues]

Yes, I figured that their risk would be offset by the lower death benefit.


Because my needs shrink every year that I am alive and earning. It seems silly to me that I should pay to have a $1mm benefit when I only need that benefit if i kick it this year. if i can last another 10 years then I will only need half that amount.

Please elaborate!

Depending on your age and health the decrease in insurance may have to be significant.

I get this question from time to time. Usually works out that they do a level plan or ladder.

Laddering - buy a GUL for $X, also a 30 year for $X, and 20 year for $X and so on.

With the correct plan and company I prefer the self regulating idea. Mainly because stuff happens. I may not want to decrease.

 

[SWM]

As Wino stated, ladder your contracts based on projected need. It would normally be beneficial to do it through the same insurance company as some will wave policy fees on additional wrapped contracts.

 

[WinoBlues]

Also I would recommend having the longest 1 with a convertible company. Of course waiver of premium.

 

[dgoldenz]

Get a term policy with Prudential, they will let you reduce the death benefit every year if you want.

 

[xrac]

Yes, I figured that their risk would be offset by the lower death benefit.

Because my needs shrink every year that I am alive and earning. It seems silly to me that I should pay to have a $1mm benefit when I only need that benefit if i kick it this year. if i can last another 10 years then I will only need half that amount.

Please elaborate!

My thought would be to not minimize the effect inflation will have on he amount of insurance you will need or the use of life insurance in dealing with estate taxes.

 

[Norwayguy]

Is there such thing a life insurance with a diminishing benefit?

This is what I have in mind - the premium starts out high and the benefit starts out high, then with each year the premium goes down and the death benefit goes down as well.

Thanks in advance!

Let me ask you this....What was your life insurance needs 10 years ago? What has changed to get you to the need you have now? How certain are you things won't change again in the next 10 years? How much is that peace of mind of having the 1 million still in place over only 500K worth to you?