Final answer:
The most commonly used insurance policy in credit life insurance is decreasing term, which covers the outstanding loan balance and decreases over time as the borrower pays off the loan.
Step-by-step explanation:
The most commonly used insurance policy in credit life insurance is decreasing term. In credit life insurance, the policy covers the outstanding loan balance and pays off the debt if the borrower dies.
As the borrower pays off the loan, the amount of insurance coverage decreases over time, which is why a decreasing term policy is typically used.