Which of the following is not allowed in credit life insurance?
Asked by: Kaya Bauch I | Last update: August 28, 2025Score: 4.1/5 (37 votes)
What is allowed in credit life insurance?
What Does Credit Life Insurance Cover? The primary coverage benefit of credit life insurance is the protection it allows joint borrowers. These plans help ensure that one person is not left to cover the outstanding debt after the other joint borrower passes.
Which of the following is correct about credit life insurance?
The correct statement about credit life insurance is that it may be provided through a group or individual policy.It offers financial protection for the borrower's family, ensuring they aren't burdened by the debt.
What is not true regarding credit life insurance?
Final answer:
The statement that is incorrect regarding Credit Life Insurance is that benefits are paid to the borrower's beneficiary. Instead, the benefits are paid directly to the creditor to cover the debt in case the borrower dies before repaying the loan.
Which of the following statements is false regarding credit life insurance?
Final answer: The false statement about Credit Life Insurance is that the amount of coverage depends on the duration of the loan, when in fact it is related to the remaining loan balance.
What is credit life insurance?
What is a disadvantage to a credit life insurance policy?
Potential Drawbacks of Credit Life Insurance
The credit life insurance coverage also ends after you pay off the debt. Premiums can be more expensive than regular life insurance: Since credit life insurance doesn't require a medical exam, the coverage could be more costly than traditional life insurance.
Which of the following is true regarding the insurance amount of credit life policy?
Explanation: In a credit life policy, the amount of insurance coverage is usually linked directly to the amount of debt or loan amount. Therefore, the option b) 'The creditor can only insure the debtor for the amount owed' is most likely to be true.
Which of the following is not allowed in credit life?
Option D) Creditor requiring that a debtor has a life insurance: This is NOT allowed in credit life insurance.
What does a credit life insurance cover?
It covers you in the event of unemployment, disability or death. As we mentioned before, credit life insurance is there to ensure that should something happen that leaves you unable to earn an income (such as retrenchment, unemployment, illness, disability or death), your family won't be burdened with paying your debt.
Which of the following best describes credit life insurance?
In summary, Credit Life insurance is designed to provide financial protection for both the borrower's family and the lender by ensuring that the outstanding loan amount is settled in the event of the borrower's death.
What type of policy is used in credit life insurance?
Credit life insurance is a specialized type of policy intended to pay off specific outstanding debts in case the borrower dies before the debt is fully repaid. Credit life policies feature a term that corresponds with the loan maturity.
What is true of credit life except?
The correct answer to the statement 'All of the following are true of credit life EXCEPT' is option B: The insured names the beneficiary. In credit life insurance, the beneficiary is usually the creditor, not someone named by the insured.
What is covered by credit insurance?
What does credit life insurance do? If you manage your credit well, credit life insurance could give you peace of mind that your debt is fully covered if you were to pass away or got retrenched, sick or disabled and could no longer earn an income and therefore afford to pay your loans/debt.
Why is credit life insurance not such a good deal?
Cautions about credit insurance
The premium for credit insurance is often included in the total amount of the loan or credit, meaning you pay interest on it. This can cost you a lot of money over time. If you choose to buy credit insurance or debt cancellation coverage, make sure you understand the benefits and terms.
What are the three types of credit insurance?
Key Takeaways. There are three kinds of credit insurance—disability, life, and unemployment—available to credit card customers.
What is credit life insurance Quizlet?
Credit Life Insurance. Insurance on the life of a debtor in connection with a specific loan or credit transaction. Pays off all or some of your loan if you die during the term of your coverage.
What is true about credit life insurance?
Credit life insurance is generally a type of life insurance that may help repay a loan if you should die before the loan is fully repaid under the terms set out in the account agreement. This is optional coverage. When purchased, the cost of the policy may be added to the principal amount of the loan.
Which of the following is generally a form of credit life insurance?
Final answer: The correct answer is C, decreasing term insurance, which is commonly a form of group credit life insurance as it decreases in value over time, analogous to the balance of a loan. Other options do not fit within the typical structure of group credit life insurance.
Can I borrow money from my old mutual life policy?
The maximum loan amount allowed by Old Mutual is 90% of the value of the policy. Charges are then taken off this amount. After five years, money can be taken out of the savings policy.
What is credit life insurance designed to cover?
What does credit life insurance cover? Unlike traditional life insurance, which provides a general payout to your family, credit life coverage focuses solely on protecting co-signers and loved ones from inheriting specific debt obligations.
Which of the following is not applicable in life insurance?
The principle of indemnity is not applicable on life insurance policy because one cannot estimate the loss due to the death of a person. Was this answer helpful? Which of the following is not applicable in a Life Insurance contract?
Which one of the following is not included in the terms of credit?
The correct answer is savings. In terms of credit, apart from the rate of interest, collateral also includes documentation, mode of repayment. Rate of interest- The borrower is required to pay interest on the principal amount.
What is a disadvantage to a credit life insurance policy responses?
Drawbacks of credit life insurance
The lender is the sole beneficiary, so your heirs can't receive any of the death benefit or use it to pay other bills. Credit life insurance is usually more expensive than term life policies of equal value.
What best describes credit life insurance?
Credit life insurance is a financial policy that helps cover outstanding debt if the borrower passes away during the loan term. It's similar to life insurance, except it's more restrictive and provides the lender with a death benefit, not your family.
What type of insurance policy is used in credit life insurance?
Which of the following types of insurance policies is most commonly used in credit life insurance? Credit insurance is a special type of coverage written to insure the life of the debtor and pay off the balance of a loan in the event of the death of the debtor. It is usually written as decreasing term insurance.