What is true about a decreasing term life policy?

A decreasing term life policy is designed to provide a death benefit that decreases over the life of the policy, typically aligning with financial obligations that diminish over time, such as a mortgage. As the term progresses, the face amount—the amount that will be paid out upon the insured's death—decreases, potentially reaching zero by the end of the term. This structure is particularly useful for policyholders who want to ensure that their dependents will have adequate financial support during a specific period when their financial liabilities are highest and will lessen as those liabilities are paid down.

The other characteristics noted in the incorrect options help clarify the specific nature of decreasing term life policies. Premiums typically remain level throughout the policy's life; they do not increase over time, which makes it affordable for policyholders. Moreover, decreasing term policies do not accumulate cash value like permanent life insurance policies do, meaning there is no savings component attached that could provide funds during the insured's lifetime. Additionally, while the death benefit is guaranteed at the outset of the policy, it is subject to decrease over time, thus making the face amount reaching zero at policy expiration the only accurate statement regarding its function.