What is one key characteristic of Creditor Insurance?

Creditor Insurance is primarily designed to provide financial protection by covering the repayment of debts in the event that the borrower is unable to make their payments. This could be due to various reasons such as job loss, disability, or even death. The main function of creditor insurance is to keep the borrower’s debts from becoming a burden on their loved ones or leading to financial distress during difficult times, thus ensuring that loans, such as mortgages, remain secured.

This characteristic is vital for borrowers who wish to protect themselves and their families from potential financial crises. The insurance typically pays off outstanding debts directly to the lender, which can help maintain financial stability for the borrower’s dependents.