What type of life policy best protects a 15-year mortgage?

A 15-year decreasing term policy is specifically designed to align the coverage amount with the decreasing obligation of a mortgage. As the mortgage principal is paid down over time, the death benefit provided by a decreasing term policy also decreases. This matches the borrower’s liability, ensuring that if the policyholder passes away, the insurance benefit will cover the remaining mortgage balance.

Using this type of policy effectively protects the dependents from the burden of the debt in the event of the policyholder's death, ensuring that the mortgage can be paid off without financial strain. The term length perfectly fits the 15-year duration of the mortgage, providing appropriate coverage for the entire loan term.

In contrast, whole life policies and universal life policies provide permanent coverage that does not decrease. While they offer lifelong protection, they may involve higher premiums and do not specifically match the decreasing nature of a mortgage. A level term life policy offers a constant death benefit over a set period, which may not reflect the changing needs as the mortgage balance decreases. Therefore, a 15-year decreasing term policy is the most fitting choice for protecting a 15-year mortgage.