Final answer:
The example given is of a mortgage protection policy, which serves to cover the mortgage payments if one of the spouses dies, ensuring the surviving spouse can keep the home.
Step-by-step explanation:
The scenario presented is an example of a c) Mortgage protection policy. This is a type of insurance designed to protect the surviving spouse from financial loss in case one of the income earners dies and is unable to contribute to the mortgage payments.
Individuals or couples can acquire mortgage protection insurance to ensure their home loan is covered and the policy pays out to cover the mortgage in the event of one's death, thus allowing the surviving spouse to maintain ownership of the home without the financial burden of the mortgage.