Protection for repayments on a personal loan, mortgage or credit card or regular financial commitments. It meets repayments for a specified period following involuntary unemployment, accident or sickness and, usually, a death benefit is added. Policies are normally sold when the loan is arranged through banks, retailers, motor dealerships, mortgage and other finance providers. See CREDIT CARD REPAYMENT PROTECTION.
Insurance Encyclopedia
Credit reporting agency
See: consumer reporting agency.
Credit risk
Risk of financial loss from a customer’s or counterparty’s failure to settle financial obligations as they fall due. Companies respond with credit management and may also effect credit insurance. Companies making bond issues may seek guarantees from insurance companies with higher credit rating through a credit enhancement process. The credit risk is transferable from the financial market to the insurance markets through CDOS and CMOs.
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Involves the insolvency of the purchaser of exports.
Credit score
The number produced by an analysis of an individual’s credit history. Studies have shown that credit history provides an indicator of the likelihood of an auto insurance loss. Some companies use credit scores as an insurance underwriting and rating tool.
Credit securitisation
The structuring of a portfolio of credit risks into different layers. See CDOS; CMOS; CREDIT DEFAULT SWAPS; INSURITISATION.
Creditable coverage
1. Any previous health insurance coverage that can be used to shorten the preexisting condition waiting period. See also preexisting condition. 2. Under a Medicare Part D plan, a prescription drug coverage from another private insurance plan (Medigap and employer plans) that meets certain Medicare standards. When a patient is enrolled in a drug plan that gives prescription drug coverage, the plan tells the patient that coverage is equal to or better than the standard model and it is considered creditable coverage. Also called creditable prescription drug coverage.
Creditable prescription drug coverage
See: creditable coverage.
Creditor
1. Person to whom money is owed either directly or indirectly. 2. Individual who offers or extends credit creating a debt or to whom a debt is owed.
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The person to whom a debt is owed.
Credits
Represent insurance underwriting factors that have a favorable effect on an individual’s mortality rating. Credits are assigned negative values.
credits, Social Security
Word used to count toward eligibility for future Social Security benefits. Individuals work and pay taxes and earn credits. A maximum of four credits can be earned each year. Most people need 40 credits to qualify for benefits. Younger people need fewer credits to qualify for disability or survivors’ benefits. Work credits were formerly called quarters of coverage.