Question

What do the words “term”, “decreasing” or “declining term”, and “whole life” mean with respect to life insurance?

Answer 1

TERM INSURANCE:-

Term insurance is a type of life insurance policy which provides insurance cover for a specified period of time, usually called as specified "term" of years.

In term insurance, the benefit can be claimed if the the insured dies within the term, when the policy is in force.

There are many types of term insurance, one being,

DECREASING TERM INSURANCE:-

This is a renewable term insurance in the sense that the coverage under this type of insurance, keeps on declining throughout its life. The decline can happen monthly or annually or at any other pre-determined frequency.

Premiums are usually constant for decreasing term insurance irrespective of its declining coverage,

Another type of life insurance is,

WHOLE LIFE INSURANCE:-

As the name suggests, this type of insurance provides a coverage for the entire life of the insured person as long as the required premiums are paid.

Since, this covers a much higher duration, the premium is considerably higher than that of a Term Insurance.