Definition of "Credit Insurance"

Optional coverage that pays off the balance of an outstanding loan in the event you become disabled, unemployed or die. Exact coverage depends on the particular policy. Variations include credit health or disability (pays if you get sick or become disabled) and credit unemployment insurance (pays if you involuntarily lose your job). Usually offered with credit cards, auto loans and mortgages.

Insurance issued to creditors as protection against losses on outstanding loans due to the death or disability of the debtor.