Which life insurance option is typically the least expensive for paying off a long-term debt?

• A. Whole life
• B. Universal life
• C. Decreasing term life
• D. Variable life

Answer: (C)

When you want life coverage to pay off a long-term debt, you want protection that aligns with the amount of debt remaining. A decreasing term life policy does exactly that: the death benefit starts high to cover the initial loan balance and then declines over time as the debt is paid down. Because the policy’s benefit shrinks and it has no cash value, the cost is lower than permanent types that build cash value or maintain a constant benefit. So for debt protection tied to a loan that decreases over time, decreasing term life is typically the least expensive option. In contrast, whole life and universal or variable life include cash value or investment components and higher overall costs, which is why they aren’t the least expensive choice for this purpose.