What type of insurance is usually purchased in connection with a mortgage loan?
A. Level term.
B. Whole life.
C. Universal life.
D. Decreasing term.
Answer (2)
The most common type of insurance purchased in connection with a mortgage loan is decreasing term insurance, which decreases in coverage as the mortgage balance decreases. This type of insurance provides financial security by covering the remaining mortgage amount if the borrower passes away. Other types, like whole and universal life insurance, are generally not designed for this specific purpose.
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Decreasing term insurance is the most relevant type of insurance typically purchased with a mortgage loan, as it aligns coverage with the declining balance of the mortgage. Other types such as whole life and universal life, while valuable, do not serve the specific purpose of mortgage protection. Hence, decreasing term is often the preferred choice. ;
