Credit Life Insurance
Credit Life Insurance

See Also:
Employee Health Insurance Plan
Third Party Insurance
Personal Credit for Commercial Loan
How to avoid additional insurance premiums
Insulate Your Company from Rising Health Insurance Costs

Credit Life Insurance Definition

Individuals use credit life insurance policies to cover the outstanding debt on a loan. As the loan decreases, so does the plan until they both reach maturity, and the entire amount of the loan is due.

Credit Life Insurance Meaning

A credit life insurance policy is usually put on loans like a mortgage. Many adopt credit life insurance so their loved ones will not have to cover the cost of the mortgage or loan outstanding after their passing. The great thing for insurance companies is if the person lives to the maturity of the loan, then the amount gained through insurance payments is straight profit without having to account for any liabilities.

Credit Life Insurance Example

For example, George is 65 years of age. He just moved into a new house with a 15-year mortgage. But George has had health problems in the past. So he decides that he needs to invest in credit life insurance so that the mortgage burden will not be on his four kids. George ends up living throughout the entire loan; thus, the insurance plan has reached its maturity and won’t need to be exercised. It should be noted that if George had died during the time of the loan, then the insurance company would be required to pay out whatever amount that George owed on his mortgage. In this situation George’s debts would all be paid for without putting an unwanted burden on his kids.
credit life insurance
 

ARTICLES YOU MIGHT LIKE

The Struggles of Private Company Accounting

Hiring the right accountant  When I meet a business owner operating at a successful $10 million in revenue, they often mention, “My CPA”… I immediately know that CEO/Entrepreneur is referring to their Tax CPA.  That is because one thing that all Entrepreneurs have in common is that they must file a tax return.  So, from

Read More »

What the Current Hiring Process Costs

It’s hard for companies to realize how much they are actually spending when it comes to hiring a new employee. Once they decide it’s time to pursue a new worker, a lot of resources are used to find the perfect candidate for the job. Finding the perfect candidate within a vast number of people might

Read More »

When You Know It’s the Right Hire

Hiring is an important aspect in a company’s development. When you know it’s the right hire, it can benefit the company in countless number of ways, such as saving money, increasing productivity, and improving employee morale. However, when done incorrectly, it can damage the company significantly. A company should always be able to determine whether

Read More »

JOIN OUR NEXT SERIES

Financial Leadership Workshop

MARCH 28TH-31ST 2022

THE ART OF THE CFO®

Financial Leadership Workshop

Days
Hours
Min

September 12-15th 2022

Days
Hours
Min
SHARE THIS ARTICLE

JOIN THE NEXT STRATEGIC CFO™ WORKSHOP SERIES

Strategic CFO™ Financial Leadership Workshop
The Art Of The CFO®

Days
Hours
Min

February 27 - March 2, 2023

Skip to content