In decreasing term insurance, what happens to the face amount over time?

In decreasing term insurance, the face amount is designed to decrease over the life of the policy, often at a predetermined rate. This means that as time progresses, the amount payable upon the insured’s death reduces, eventually reaching a point where it can dwindle down to zero. This structure is particularly beneficial in situations where the financial obligations of the insured, such as a mortgage or other debt, decrease over time.

For example, if a policyholder has a decreasing term life insurance policy to cover a mortgage, as the mortgage balance decreases with regular payments, the death benefit of the insurance also reduces correspondingly. This aligns the insurance coverage with the decreasing need for insurance as debt obligations diminish.

The other options describe scenarios that do not occur in decreasing term insurance. The face amount does not stay the same, nor does it increase. Additionally, while the policy has a term limit after which it can expire, the key characteristic is the decline in the face amount to zero over time, which is the defining feature of decreasing term insurance.