What type of insurance policy offers decreasing death benefits and is commonly used for mortgages or debts?

The type of insurance policy that offers decreasing death benefits and is commonly used for mortgages or debts is a decreasing term policy. This structure is particularly designed to align with financial obligations that diminish over time, such as a mortgage or a personal loan.

In a decreasing term policy, the death benefit amount starts at a predetermined level and decreases gradually over the life of the policy. This correlates well with debts like mortgages, where the outstanding balance decreases as payments are made. The policyholder pays a fixed premium throughout the term, but the death benefit reduces, which reflects the decreasing liability associated with the debt the policy was originally intended to cover. This makes decreasing term insurance a cost-effective solution for individuals looking to ensure that their dependents can manage or pay off debts in the event of their unexpected passing, while they are primarily focused on maintaining lower premiums.

Other types of policies, such as a level premium with increasing death benefit or whole life insurance, do not fit this specific need as they either maintain a fixed death benefit or exponentially increase it, rather than decrease over time. Thus, decreasing term stands as the most suitable option for these circumstances.