Life · Chapter 4 · Term Life
Credit Life Insurance
Definition
Decreasing term on a debtor; pays the lender the loan balance if the debtor dies. Max benefit = the outstanding indebtedness — Florida: credit life "shall at no time exceed the amount of the indebtedness" (F.S. 627.679(1)(b)).
Exam tip
Requiring the borrower to buy from a particular insurer or agent as a condition of the loan is illegal coercion of debtors (F.S. 626.9551). A lender MAY require that insurance exist — it just can't dictate who writes it.
Easy to confuse with
These are what this term gets tested against — if you can't tell them apart cold, drill the contrast.
Related terms