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