Texas Life Agent Practice Exam

Which group typically does NOT benefit from Credit Life insurance?

1. Individuals with substantial savings

2. Borrowers with outstanding loans

3. Single individuals without debt

4. Homeowners seeking mortgage protection

The correct answer is: Individuals with substantial savings

Credit Life insurance is designed primarily to pay off a borrower's debts in the event of their death, thus protecting lenders and ensuring that outstanding loans are covered. Individuals with substantial savings typically do not benefit from Credit Life insurance because they have the financial resources to cover their debts independently, even in the event of unexpected circumstances such as death. This insurance product serves more as a safety net for those who may not have the financial means to manage their debt obligations without significant hardship. In contrast, borrowers with outstanding loans, homeowners seeking mortgage protection, and even single individuals without debt may find some level of benefit from Credit Life insurance. Borrowers with loans want to ensure their debts are paid off if they pass away, while homeowners often seek this protection specifically for mortgage-related debts. Single individuals without debt may not immediately need Credit Life insurance, but they might still potentially benefit from it in specific circumstances depending on their future financial situations or responsibilities.