What type of life insurance policy is best suited for an individual who has borrowed $10,000 on a 5-year installment loan?

A decreasing term life insurance policy is particularly suited for an individual who has taken out a $10,000 installment loan due to its structure and purpose. This type of policy is designed to provide coverage that decreases over time, matching the declining balance of a debt such as a loan.

As the borrower pays down the loan, the coverage amount decreases, which aligns with the individual's need to have sufficient life insurance to cover the loan's outstanding balance if something were to happen to them. This ensures that the borrower's responsibilities can be met, relieving the financial burden on their beneficiaries.

In contrast, other insurance options such as variable life, universal life, and whole life do not specifically cater to the diminishing coverage needs associated with a fixed debt. Variable and universal life policies often involve cash value components and are more complex in their benefits and investment options, while whole life insurance provides a level amount of coverage that doesn't adjust over time to match the decreasing liability of the loan. Thus, the best fit for this situation is a decreasing term policy.