How to Use Decreasing Term Insurance as Mortgage Protection

August 3, 2022

Home sweet home. If you’re like most American families, your home is both your largest asset and your largest financial responsibility.

Even if you have a healthy balance sheet and your assets could cover the outstanding mortgage balance in the event of catastrophe, here’s the ultimate question: Would you want your family to use up those assets to pay off the outstanding mortgage balance? For those that would not, what’s a low-cost solution?

Decreasing term life insurance is an affordable way to protect you from being over insured, yet at the same time ensure that a specific debt, e.g. a mortgage, will be paid off in the event of catastrophe. For example, if you have a 30-year mortgage, you can buy a decreasing term life insurance policy to match the coverage amount and length of the mortgage. Each year, both the insurance payout and the mortgage principal balance would decrease together.

So, what’s the case against decreasing term life insurance? It might not be enough, as it doesn’t factor in other needs your beneficiaries may have throughout their life – everything from the cost of a funeral to housing, raising children, college tuition, and other daily living expenses. While some expenses will probably drop over time, others may rise.

What’s the right amount of coverage for your family? Please feel free to reach out. We are
happy to discuss how to protect your beneficiaries and how much overall insurance you may need, if any.

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Davis Wealth Management LLC d/b/a Davis Wealth Management. James Davis offers Securities through Concourse Financial Group Securities, Inc. (CFGS), Member FINRA/SIPC. Advisory services offered through Concourse Financial Group Advisors, a DBA for CFGS, a Registered Investment Advisor. Davis Wealth Management is independent from CFGS. Please be advised that presently James Davis holds Series 7 and 66 licenses in NC and SC. For residents of other states in which registration is not held, proper licenses and registrations must be obtained by representatives before proceeding further. No part of this communication should be construed as an offer to sell any security or provide investment advice or recommendation. Securities offered through CFGS will fluctuate in value and are subject to investment risks including possible loss of principal.

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