What type of insurance is associated with a Mortgage Redemption policy?

A Mortgage Redemption policy is specifically designed to pay off the remaining balance of a mortgage in the event of the policyholder’s death. The most suitable type of insurance for this purpose is decreasing term insurance. As the mortgage balance decreases over time, the death benefit provided by the policy also decreases in tandem. This ensures that in the event of the insured's death, the payout is sufficient to cover the remaining mortgage amount owed.

Decreasing term insurance aligns perfectly with the structure of a mortgage, which typically involves a large principal that diminishes as payments are made. Thus, the insurance coverage is synchronized with the liability, ensuring that beneficiaries can clear the mortgage without any financial burden.

In contrast, other types of insurance such as whole life, universal life, and term life insurance generally provide a fixed death benefit throughout the life of the policy, or do not specifically adjust to the decreasing obligations of a mortgage.