Decreasing Term

[newbie2010]

I have a prospect who is looking for Decreasing Term here in CA . I don't know anything about decreasing term, and my upline tells me yesterday that it doesn't exist.

So to make a long dtory short this is what I tell my client, and I go ahead and send him over a 30 year level term quote through Transamerica, they weren't the cheapest but they seem to have the best Underwriting to possible get him a preferred or Preferred+ rating wich in essence will be cheaper than a standard or standard+ rating from another carrier.

So I send him the app yesterday and he calls me today to let me now that his bank is going to call him today with some details on Decreasing Term. So does it exist?

The client has a mortgage of 390,000. His budget though is right around $100 bucks monthly. He seems to think that he will get more coverage from decreasing Term than from Level term

So I gave him a quote for 250k Preferred+ at $109 monthly..30 year term he is 53 years old here in CA. Any ideas as to what I should do to get him to want the level term over the decreasing term?

I am with Farmers and we have decreasing term, but I always recommend traditional 30 year term because the policy will pay the full death benefit at any time. With decreasing term, the death benefit decreases as the balance of the mortgage decreases, but the premium stays the same. When I explain this to clients, they always go with traditional term and sometimes even UL, VUL or WL.

 

[fcorcoran]

Go with a regular term of 30year. Yes there are still decreasing term policies. Just like Newbie2010 said, Farmers has a good decreasing term policy that is pretty easy to issue, but for just a few bucks more, go for whats better for the client and give them some protection that never slides away slowly. Your client will thank you for it if something happens 10 years from now.

 

[Mattschmidt]

I think its depends on insurance holder,advantage or disadvantage both are there.

could you please describe the advantage of a term product, whose premiums remain the same, but the death benefit decreases over time???

 

[dsimo11]

You can't, there are no advantages!!

 

[Mattschmidt]

You can't, there are no advantages!!

Glad I'm not the only one who feels that way...

 

[Josh]

could you please describe the advantage of a term product, whose premiums remain the same, but the death benefit decreases over time???

Sure thing. Lower premium.

Considering the insignificance of the difference in cost it probably doesn't make much sense, but apples to apples it's going to be cheaper.

Don't worry, it's something only a third generation financial advisor can understand, so when you have kids they can explain it to you.

 

[fcorcoran]

Sure thing. Lower premium.

Considering the insignificance of the difference in cost it probably doesn't make much sense, but apples to apples it's going to be cheaper.

Don't worry, it's something only a third generation financial advisor can understand, so when you have kids they can explain it to you.

I agree with Josh. The big difference is premium. Its a last resort, but its better than nothing. A decreasing term is simply mortgage insurance. If you make payments on a home, one needs to at least cover the home for the cost of the loan. You dont want to leave your survivers with home payment, and the premium is not much. Usually about 20/mo for first time homeowners.