What type of life insurance features a death benefit that decreases each year?

Decreasing term life insurance is specifically designed with a death benefit that reduces progressively over the life of the policy. This type of coverage is often used to align with financial obligations that diminish over time, such as a mortgage or other loans. For instance, if you take out a loan that has a set payment period, the amount owed decreases as payments are made. Decreasing term insurance can provide a corresponding decrease in the death benefit, ensuring that the coverage effectively matches the remaining balance of the loan.

This feature makes decreasing term life insurance a practical solution for individuals seeking to secure their financial responsibilities without paying for a level benefit throughout the policy's duration. While other types of life insurance exist with varying structures—like whole life, which offers fixed benefits, or increasing term, which provides an escalating death benefit—decreasing term is unique in its annual reduction of coverage amount.