What type of life insurance policy is commonly used to provide mortgage protection?

A decreasing term policy is commonly used to provide mortgage protection because its face value decreases over time, which aligns with the decreasing balance of a mortgage as the borrower makes payments. The primary purpose of this type of insurance is to ensure that if the borrower passes away, the payout will cover the remaining mortgage balance, thereby protecting the borrower's family from being burdened with the mortgage debt.

In contrast, whole life policies offer permanent coverage with a cash value component, making them less suitable for the need to match a decreasing debt obligation like a mortgage. A term life policy provides coverage for a specific period but doesn't necessarily decrease in value over time, which means it may not correspond effectively to the mortgage balance. Universal life policies also offer permanent coverage with flexibility in premiums and death benefits, but, similar to whole life, they do not decrease in coverage as the mortgage balance decreases. Therefore, a decreasing term policy precisely meets the specific needs for mortgage protection.