Definition of "Credit Life Insurance"

Term life insurance issued through a lender or lending agency to cover payment of a loan, installment purchase or other obligation, in case of death.

A life insurance policy on the life of a borrower that pays off the balance of the loan in the event the borrower dies. The face amount of the credit life insurance policy decreases as the loan is paid off and generally is a decreasing term policy. The policy can be issued on either an individual or group basis.