Final answer:
The correct answer is option D. A Decreasing Term insurance policy has a death benefit that decreases over the policy's term, which is often aligned with a decreasing liability like a mortgage.
Step-by-step explanation:
The type of life policy that has a death benefit that adjusts periodically and is written for a specific period of time is known as Decreasing Term insurance. This policy is structured so that the death benefit decreases at a predetermined rate over the life of the policy while the premium remains level. This type of policy is often used in conjunction with a mortgage or other debts that decrease over time and are designed to match the decreasing liability.
For example, if a homeowner has a mortgage that reduces as they make payments, a decreasing term policy can be used to ensure that if they were to pass away, the remaining mortgage debt could be covered by the insurance policy's death benefit. The death benefit lowers in tandem with the decreasing mortgage balance. This ensures that the homeowner's beneficiaries are not left with a financial burden.
Therefore, the correct option for the type of life policy in question is D. Decreasing Term.