Which type of life insurance is most suitable for covering a mortgage?

Decreasing Term Life Insurance is particularly suitable for covering a mortgage because the coverage amount decreases over time in alignment with the outstanding balance of the mortgage. As you pay down your mortgage, the amount of insurance needed to cover it also decreases. This type of policy provides a cost-effective solution since it typically has lower premiums compared to whole or permanent life insurance products.

In contrast, whole life insurance and permanent life insurance offer lifelong coverage with a level death benefit and often include a cash value component that builds over time, which is not directly related to the fluctuating needs associated with a mortgage. Universal life insurance also provides flexible premiums and potential cash value accumulation but does not specifically cater to the decreasing nature of a mortgage debt baseline.

Thus, for individuals seeking to ensure that their mortgage is covered while minimizing costs, decreasing term life insurance is a practical choice. It provides sufficient coverage during the term of the mortgage while aligning the benefits with the reducing liability.