What is typically the main advantage of decreasing term insurance in relation to mortgages?

The main advantage of decreasing term insurance in relation to mortgages is that it reduces coverage as the mortgage balance decreases. This type of insurance is specifically designed to correspond with the declining balance of a mortgage over time. As the borrower pays down their mortgage, the coverage amount of the policy decreases, which helps ensure that the insurance benefit closely aligns with the amount of debt that remains. This structure can help keep premiums lower than level term policies, as the risk to the insurer decreases as the loan is paid off.

This correlation makes decreasing term insurance particularly advantageous for homeowners who want to ensure their mortgage is paid off in the event of their untimely death, allowing their beneficiaries to inherit the home free of debt while also potentially saving on premium costs throughout the life of the policy. Such a policy does not accumulate cash value or allow for premium investments, nor does it increase in value over time, as its primary function is to provide life insurance coverage that decreases in line with the mortgage amount.