Insurance provision in a mortgage requires:

• A. Borrower to maintain property insurance as part of loan terms
• B. The lender to provide life insurance
• C. Insurance for contents only
• D. Insurance for the loan's investment firm

Answer: (B)

The key idea is that lenders require protection for their collateral. When a mortgage is issued, the home itself serves as the security for the loan, so the borrower must carry adequate property (hazard) insurance on the dwelling. This coverage protects the lender if the home is damaged or destroyed, helping ensure the loan can still be repaid. The policy typically names the lender as a loss payee or mortgagee.

Life insurance on the borrower isn’t a standard loan requirement, though some lenders may offer it as an optional product. Insurance that covers contents only protects personal belongings and does not safeguard the structure itself, so it won’t meet the lender’s needs for collateral. Insurance for an investment firm isn’t related to this loan’s security.