In a decreasing term policy, what is the component that decreases each year?

In a decreasing term policy, the element that decreases each year is the face amount. The face amount is the amount of death benefit that is payable to the beneficiary upon the insured's death. Unlike whole life or level term policies, where the coverage remains constant throughout the policy's term, a decreasing term policy is designed so that the death benefit decreases over time. This type of insurance is typically used to cover obligations that diminish over time, such as a mortgage balance. As the insured pays off the mortgage, the face amount reduces correspondingly, ensuring that the coverage aligns with their decreasing financial liability.

The premium payment generally remains level throughout the term; therefore, it does not decrease. Coverage limitations are typically defined in the policy and are not a component that decreases over time, and the deductible amount is not a standard feature in term life policies but is more often associated with health and property insurance.