Which type of insurance is typically used to protect against an unpaid mortgage balance?

The correct choice for protecting against an unpaid mortgage balance is credit life insurance. This specialized type of life insurance is designed specifically to pay off outstanding debts, such as a mortgage, in the event of the borrower's death. Credit life insurance is typically offered by lenders as a condition for the loan, providing peace of mind to both the borrower and the lender that the debt will be settled if something happens to the borrower.

Term insurance, while providing coverage for a specified period, is not specifically tailored towards covering debts and does not have the provision where the death benefit directly pays off a specific debt like a mortgage. Joint life insurance covers two individuals, usually in a partnership or marriage, but it does not directly correlate with protecting against unpaid mortgage balances in the same focused way as credit life insurance.

Variable universal life insurance is a more complex product that combines elements of whole life and investment components, but it too isn’t specifically aimed at paying off debts like a mortgage upon the policyholder's death. Therefore, credit life insurance stands out as the most appropriate form of insurance for addressing unpaid mortgage balances.