Declining term insurance is a type of life insurance in which the face value of the policy decreases as time goes by. At the beginning of the policy, the insured will have the largest potential death benefit. After a few years, the face value will decrease. The face value might decrease again after that depending on how long the term of the policy is.
This type of insurance is beneficial for individuals that are looking for the cheapest type of life insurance coverage. Premiums for this type of insurance are generally much cheaper than a traditional term life insurance policy. They are also less expensive than whole life insurance or variations of that type of coverage.
For many people, this type of policy coincides with their financial needs. At the beginning of the term is when they generally need the most coverage. This could be when they have the highest mortgage balance and a family to take care of. As time goes by, their debts decrease and they no longer have the obligations that they once did. This means that the face value of the policy can decrease and it will not negatively impact them that drastically.