When a decreasing term policy is purchased, it contains a decreasing death benefit and

• A. Decreasing death benefit and level premiums
• B. Decreasing death benefit and increasing premiums
• C. Level death benefit and increasing premiums
• D. Level death benefit and level premiums

Answer: (A)

A decreasing term policy is designed so the death benefit falls over time while the premiums stay the same. This matches the idea of protection that’s used to cover a financial obligation that also decreases, like a mortgage payoff, where you need less coverage as the loan balance shrinks. Keeping premiums level throughout the term makes budgeting predictable even though the protection amount is shrinking, which is why the standard pairing is a decreasing death benefit with level premiums. The other structures don’t fit the typical design: a decreasing benefit with increasing premiums isn’t standard, and level or increasing premiums paired with a level death benefit describe other policy forms (like level term or other increasing premium variations) rather than decreasing term.