In a decreasing term life insurance policy, the death benefit over the policy's term:

Why A is correct

Decreasing term provides a level premium for a death benefit that falls over time, typically in step with a declining obligation such as a mortgage balance or a shrinking need for income protection. Because the insurer's exposure declines each year while the premium stays fixed, the cost per dollar of coverage rises as the policy ages. The coverage reaches zero by the end of the term unless the policy is converted. This design makes decreasing term a low-cost way to insure a debt that is being paid down.

Why the other options are wrong

• B) The premium stays level in a decreasing term policy; the benefit declines while the premium does not change. Each year the insurer's exposure shrinks, which keeps the level premium low relative to level term.
• C) A level benefit with a level premium describes level term insurance, not a decreasing benefit schedule. The level premium is the defining feature of this product, even as the benefit declines over time.
• D) Increasing coverage over time describes an increasing-benefit design; decreasing term moves in the opposite direction. Level term insurance keeps both the face amount and the premium constant for the full term.

Memory hook

Decreasing term: benefit slides down the ladder, premium stays planted. Great for debts that shrink.