Utah Life Producer Practice Exam

Question: 1 / 400

Who is typically the policyowner in a credit life insurance policy?

The insured

The creditor

In a credit life insurance policy, the typical policyholder is the creditor. This type of insurance is specifically designed to pay off a borrower's debt in the event of their death, ensuring that the loan is satisfied without imposing a financial burden on the borrower's family or estate. The creditor takes out the policy to protect their financial interest, as they receive the insurance benefit directly to cover the outstanding debt.

In this arrangement, the insured is often the borrower, but they do not own the policy. The creditor, as the policyowner, has the right to make decisions about the policy, including its cancellation or modification. The guarantor is not a standard participant in these arrangements, and while there may be beneficiaries named in the policy, they usually do not have any control or ownership over the policy itself, as it is designed to ensure the creditor is paid first.

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The guarantor

The beneficiaries

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