Which of the following best describes a decreasing term life insurance policy?

A decreasing term life insurance policy is designed to provide a death benefit that decreases over the life of the policy. This type of policy is often used to cover specific financial obligations that diminish over time, such as a mortgage or other loans. As the insured person makes payments on these debts, the outstanding balance decreases, and correspondingly, the coverage amount of the insurance policy also decreases. This structure allows for a potentially lower premium compared to level term insurance, while still providing necessary coverage that aligns with the decreasing nature of the associated financial risk.

In contrast, policies that maintain a constant coverage amount or those that increase coverage over time, such as permanent insurance options, do not fit the description of a decreasing term life insurance policy. Therefore, the fundamental characteristic that defines this type of policy is the gradual reduction in coverage amount as specified.