Credit Disability (Decreasing Term DI)

Protects the lender: if a borrower becomes disabled before a debt is paid off, the policy pays the monthly debt payments directly to the creditor while the insured is disabled. The lender/creditor is both policy owner AND beneficiary; the debtor is the insured and typically pays the premiums. A creditor cannot insure a debtor without permission, and a certificate of insurance must be issued within 30 days of indebtedness. Payments stop when the insured no longer meets the definition of disability or the debt is paid in full — whichever comes first. Also called decreasing (reducing) term disability insurance, since the insurer's exposure shrinks with each loan payment.

Your loan keeps getting paid while you're disabled — but the bank, not your family, is the beneficiary.