What type of insurance is specifically written to insure the life of a debtor?

Credit insurance is designed specifically to insure the life of a debtor. This type of insurance provides coverage that pays off the remaining debt if the debtor passes away before the obligation is fully satisfied. Its main purpose is to protect lenders against the risk of default due to the borrower's death, ensuring that debts such as personal loans or mortgages are settled and do not burden the deceased's estate or their family members.

Other types of life insurance, while they provide death benefits, do not serve the specific function of covering debts tied to a borrower. For instance, term insurance provides a death benefit for a specific period but is not exclusively tied to insuring debts. Whole life and universal life insurance are forms of permanent insurance that build cash value and provide lifelong coverage, but they are not tailored specifically for debt obligations. Therefore, credit insurance stands out as the appropriate choice for insuring the life of a debtor, reinforcing the financial security of lenders and the peace of mind for borrowers.