Final answer:
Individual mortgage protection life insurance policies typically come with decreasing premiums, which decline in line with the outstanding mortgage balance. This alignment ensures that the policy's benefit is enough to pay off the mortgage as it reduces over time. The correct answer to the type of premiums associated with individual mortgage protection life insurance policies is D. Decreasing premiums.
Step-by-step explanation:
When discussing individual mortgage protection life insurance policies, we are focusing on a type of life insurance designed specifically to pay off a mortgage balance in the event of the borrower's death. These policies aim to protect the borrower's family from losing their home. There are several types of premium structures in life insurance policies, including:
- Level premiums, which remain the same throughout the policy term.
- Flexible premiums, allowing the policyholder to adjust the payment amount and frequency.
- Modified premiums, which may start lower and then increase after a certain period.
- Decreasing premiums, which decrease over time, typically corresponding to the decreasing balance of the mortgage loan they are designed to cover.
In the context of mortgage protection life insurance, decreasing premiums are most closely associated, as the policy's coverage declines as the mortgage balance decreases.