Decreasing Term

[munson]

I have not written one of these in many years. Do any companies still offer decreasing term policies? I have a client that is convinced this is right for him to cover a mortgage. Thanks.

 

[rousemark]

I have not written one of these in many years. Do any companies still offer decreasing term policies? I have a client that is convinced this is right for him to cover a mortgage. Thanks.

I would think there may be some companies that still offer it but I don't know of any..

 

[Tahoe Ray]

I have not written one of these in many years. Do any companies still offer decreasing term policies? I have a client that is convinced this is right for him to cover a mortgage. Thanks.

There are very few of these left (I know that some captives like Farmers have them...maybe Fidelity?) and they can be just as expensive as traditional term.

You can accomplish basically the same effect with a term ladder. For example, if the client needed 600k to cover a mortgage, you would buy a 200k 10yr, 200k 20yr and a 200k 30yr policy (or something that conformed to their amortization schedule). Companies like Banner will actually let you do this in one policy.

 

[rousemark]

Another option is to buy a level term for the length of the mortgage and then have the insured decrease the face amount (and premium) as time goes by. The advantage to this is if needs change during the time, they have the option of maintaining the full face amount at the initial premium rate.

 

[WinoBlues]

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There are very few of these left (I know that some captives like Farmers have them...maybe Fidelity?) and they can be just as expensive as traditional term.

You can accomplish basically the same effect with a term ladder. For example, if the client needed 600k to cover a mortgage, you would buy a 200k 10yr, 200k 20yr and a 200k 30yr policy (or something that conformed to their amortization schedule). Companies like Banner will actually let you do this in one policy.

Cool part of that is the premium is decreasing as well. Another option is laddering Protective term. Premium stays the same but face decreases to $10,000 to age 95 after the level period.

Easy to illustrate with their software.

 

[TwiLight]

Americo just rolled one out again this past Summer.... for the Mortgage Term Market..

It is called: Income Term.... Designed for the Mortgage Protection Market

 

[AlTheGud1sRtakn]

Another option is to buy a level term for the length of the mortgage and then have the insured decrease the face amount (and premium) as time goes by. The advantage to this is if needs change during the time, they have the option of maintaining the full face amount at the initial premium rate.

This is what I usually do...

 

[munson]

Americo just rolled one out again this past Summer.... for the Mortgage Term Market..

It is called: Income Term.... Designed for the Mortgage Protection Market

I saw that. I remember reading that it does not pay the benefit in a lump sum. It pays a monthly income. As far as reducing the level term death benefit as the mortgage amount is reduced, I thought of that too as many have said. Do companies limit the amount of changes you can make? Does anyone know?

 

[rousemark]

I saw that. I remember reading that it does not pay the benefit in a lump sum. It pays a monthly income. As far as reducing the level term death benefit as the mortgage amount is reduced, I thought of that too as many have said. Do companies limit the amount of changes you can make? Does anyone know?

Not as far a number but you cannot go below the minimum issue face amount.