Mortgage or credit life insurance is typically what type of coverage?

Mortgage or credit life insurance is typically classified as decreasing term insurance. This type of coverage is specifically designed to pay off a debt, such as a mortgage, in the event of the policyholder's death. The key characteristic of decreasing term insurance is that the death benefit declines over time, generally in line with the decreasing balance of the mortgage or loan it is intended to cover.

As mortgage payments are made, the remaining balance of the loan decreases, and hence, the death benefit is structured to align with that amortization schedule. This means that at the start of the policy, the death benefit will be at its highest, and it will decrease gradually until it reaches zero at the end of the term, reflecting the remaining loan balance.

Other types of life insurance, such as whole life, level term, and universal life, do not provide this specific decreasing feature. Whole life insurance provides a permanent death benefit that remains level throughout the insured’s life, while level term insurance maintains the same death benefit amount for the duration of the policy term. Universal life insurance offers more flexibility in premiums and death benefits but does not typically correlate with a decreasing debt structure like mortgage insurance does.