Credit Life Insurance is...

Credit Life Insurance is...

• A. An investment policy
• B. Issued in an amount not to exceed the amount of the loan
• C. A type of permanent life insurance
• D. Only available for mortgages

Answer: (B)

Credit Life Insurance is a type of insurance specifically designed to pay off a borrower's debt in the event of their death. The key characteristic of Credit Life Insurance is that it is issued in an amount that is directly tied to the outstanding balance of the loan. This means that the coverage amount typically cannot exceed the amount that the borrower owes, ensuring that the insurance will serve its main purpose: to relieve the borrower's estate from the burden of that debt after their passing. This design is particularly important because it provides a financial safety net for both the lender and the borrower's beneficiaries. Essentially, it ensures that the debt does not get passed on or impact the financial stability of the borrower's family. Therefore, option B accurately captures the fundamental attribute of Credit Life Insurance. The other options, while they may describe different types of insurance products or characteristics, do not represent the essence of Credit Life Insurance. It is neither an investment policy, which typically focuses on accumulating cash value and long-term financial growth, nor is it a type of permanent life insurance, which provides coverage for the lifetime of the insured with cash value components. Additionally, Credit Life Insurance is not limited to mortgages; it can apply to various types of loans, such as personal loans, auto loans,

Credit Life Insurance is a type of insurance specifically designed to pay off a borrower's debt in the event of their death. The key characteristic of Credit Life Insurance is that it is issued in an amount that is directly tied to the outstanding balance of the loan. This means that the coverage amount typically cannot exceed the amount that the borrower owes, ensuring that the insurance will serve its main purpose: to relieve the borrower's estate from the burden of that debt after their passing.

This design is particularly important because it provides a financial safety net for both the lender and the borrower's beneficiaries. Essentially, it ensures that the debt does not get passed on or impact the financial stability of the borrower's family. Therefore, option B accurately captures the fundamental attribute of Credit Life Insurance.

The other options, while they may describe different types of insurance products or characteristics, do not represent the essence of Credit Life Insurance. It is neither an investment policy, which typically focuses on accumulating cash value and long-term financial growth, nor is it a type of permanent life insurance, which provides coverage for the lifetime of the insured with cash value components. Additionally, Credit Life Insurance is not limited to mortgages; it can apply to various types of loans, such as personal loans, auto loans,