How do decreasing term premiums compare to level term premiums when initially issued?

Decreasing term premiums are typically lower than level term premiums when initially issued due to the structure of the policies. With a decreasing term policy, the face amount of the insurance decreases over time, usually in regular intervals, which inherently reduces the insurer's risk as the policyholder ages or as the term approaches its end. Since the amount of coverage decreases, the cost to the policyholder for that coverage also tends to be lower compared to a level term policy where the coverage remains constant throughout the term.

This relationship in pricing comes from the insurer's assessment of risk over time. With level term insurance, premiums remain consistent for the duration of the policy, reflecting the higher perpetual risk due to the constant coverage amount. In contrast, with decreasing term insurance, the total payout reduces, aligning with the lower premium costs associated with the decreasing liability to the insurer.