Credit life insurance,
Definition of Credit life insurance:
Credit life insurance is typically sold by banks at a mortgage closing; it could also be offered when you take out a car loan or a line of credit. The pitch is to protect your heirs if you die, since the policy will pay off the loan. If your spouse or someone else is a co-signer on your mortgage, credit life insurance would protect them from making loan payments after your death. This could be appealing if you are the primary breadwinner in your family, and the loan co-signer would be unable to make payments in the event of your death.
Usually a term life-insurance policy on the life of a borrower, and a lender as the beneficiary. It pays the lender a specified amount if the borrower dies before full repayment of the loan.
Credit life insurance is a type of life insurance policy designed to pay off a borrower's outstanding debts if the borrower dies. The face value of a credit life insurance policy decreases proportionately with the outstanding loan amount as the loan is paid off over time, until both reach zero value.
How to use Credit life insurance in a sentence?
- Credit life policies, due to their specific nature, often have less stringent underwriting requirements.
- Credit life policies feature a term that corresponds with the loan maturity and decreasing death benefits that correspond with the reduced debt outstanding over time.
- Such a policy may be required by certain lenders for specific purposes.
- Credit life insurance is a specialized type of life insurance policy intended to pay off specific outstanding debts in case the borrower dies before the debt is fully repaid.
Meaning of Credit life insurance & Credit life insurance Definition