Final answer:
The best life insurance policy for Scott, who seeks to cover his mortgage debt, is Term life insurance, because it provides coverage for a specific period and is cost-effective compared to other types with cash value components. The correct option is A.
Step-by-step explanation:
Scott is in search of a life insurance policy that aligns with the remaining balance of his mortgage in the event of his death. The best option for Scott would be A) Term life insurance. This type of policy is designed to provide coverage for a specified term or period, which can be matched to the length of his mortgage repayment schedule.
This ensures that if Scott were to pass away during the term, the death benefit from the life insurance would cover the outstanding debt on the mortgage, providing financial protection for his beneficiaries.
A term life policy is often more affordable than the other types of life insurance, like Whole life, Universal life, and Variable life insurance, as it does not build cash value over time and solely provides a death benefit.
Whereas, a Cash-value (whole) life insurance has a death benefit and also accumulates a cash value, which serves as an account that the policyholder can use.
However, this is not necessary for Scott's objective of matching his coverage to his mortgage debt. The primary function of life insurance, in general, is to provide financial protection to the insured's family after their death. It may also lend cash to policyholders against their policies or the insurer's accumulated funds. The correct option is A.