Credit Insurance

Definition

  • A form of insurance used to protect borrowers and/or lenders in the event that the consumer is unable to repay debts due to death, disability, or in some cases, unemployment. Credit insurance can be purchased by either the lender to insure credit extended by the lender (known as "business credit insurance" or "trade credit insurance") or by the borrower in order to insure credit extended to the borrower (known as "consumer credit insurance").

Synonyms
insurance policy, protection, insure payment, credit repayment coverage

Related Terms and Acronyms

  • Credit Life Insurance Definition,
    • Life insurance that repays the insured's debts upon their death. The death benefit decreases as the debt is paid off.
  • Credit Risk Definition,
    • The risk of loss assumed under a financial contract that a borrower or a counter-party to a loan or other credit-related contract may default or fail to fulfill its obligations.
  • Credit Score Definition,
    • Also referred to as a 'Beacon Score' is a number, between 300 and 900, that reflects a person's credit history. Lenders calculate this number using a computer system as part of the process for assigning rates and terms to the loans they grant.
  • Creditor Insurance Definition,
    • Insurance that repays debt if the borrower cannot.
  • Insurance (insur) Abbreviation,
    • An arrangement where one party provides financial protection to another party for specific damages or losses.
  • Penalty Rate Definition,
    • Several percentage points higher than a card's current annual percentage rate, which goes into effect after two late payments. On some cards, a single late payment triggers a penalty rate.
  • Revolving Credit Definition,
    • A line of credit that does not have a specified repayment schedule but may require a minimum payment to cover interest and contribute to paying off principal. Typical of credit card loans, chequing account cash reserve or overdraft accounts that have pre-approved lines of credit.
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