UK: A decreasing term insurance to cover the outstanding debt under hire purchase and credit sale agreements. Cover is provided under a collective policy to the creditor, e.g. finance company, to facilitate repayment on the death of any hirer or debtor. Arrears are not covered. Limits are placed on the age attained (e.g. 60 or 65) of any hirer or debtor and the length of the finance agreement (e.g. three years). Premiums are based on the average outstanding debt in accordance with returns supplied by the assured.
***
Insurance issued to a creditor (lender) to cover the life of a debtor (borrower) for an outstanding loan.
***
This type of life insurance pays the balance of a loan in the event the borrower dies before the loan is repaid. There are two common ways to purchase credit life insurance. One way is to purchase the coverage from the lender. This is normally a group life insurance policy with a flat rate per $1,000 borrowed regardless of age or health. Coverage decreases as the loan balance decreases. The lender is the beneficiary and upon the death of the insured the loan is repaid and there is no money left over.Alternatively, a borrower can purchase a decreasing term insurance policy. This is a term insurance policy for a fixed term (for example, 30 years to cover a mortgage) and coverage decreases each year at the same rate a mortgage at a certain interest rate would decrease. The borrower may name the lender as primary beneficiary but can name anyone. If there is more money from the death benefit than is owed the lender, the balance goes to the contingent beneficiary.Some lenders may add credit disability to a credit life policy. This coverage pays the insured’s regularly scheduled loan payments for some specified time period such as 1 or 2 years.
***
MEDICAL,USA: Type of decreasing term insurance calculated to pay the balance due on a loan, installment purchase, or other obligation, in case the borrower dies before the loan is repaid. Another form is credit group life insurance for insuring lives of a group of persons who are in debt to a creditor.

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.

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.
***
Involves the insolvency of the purchaser of exports.

The structuring of a portfolio of credit risks into different layers. See CDOS; CMOS; CREDIT DEFAULT SWAPS; INSURITISATION.

The scheme is controlled by the Criminal Injuries Compensation Authority, which administers compensation on the basis of common law damages to the victims of violent crime. The main awards are in respect of personal injury and fatal injury. There is no award for single injuries, such as a black eye. The 2001 scheme increased the level of awards, changed the formula for multiple injuries, extended eligibility to same sex partners and improved the presentation of the Tariff of Injuries (www.cica.gov.uk).

Trigger events or reference points underlying a weather derivative where the payout depends on the critical conditions occurring on any day in the contract period. A critical day may be each day the temperature exceeds 25°C. The amount paid is based on the number of critical days occurring during the period multiplied by the tick.

Pays out a tax-free lump sum if, during the policy term, the insured is diagnosed with any of a range of serious conditions such as cancer, heart disease, strokes and multiple sclerosis. Even when diagnosed, the insured may live for some time so necessitating the need for financial protection while undergoing treatment and recuperation. The policy can stand alone or be added to a whole life, endowment or term insurance.

Yield is the interest earned on a bond, or dividend paid on shares or a fund. In the pensions industry the term critical yield refers to the investment returns needed to provide pension income for executive pension plans, final salary scheme pensions, small selfadministered schemes, income drawdown and transfer value analysis system.

Shareholders in small companies agree that on death or retirement of a shareholder the continuing shareholders have an option to purchase the outgoing shareholder’s shares. Life insurance puts money into the hands of the continuing shareholders at the relevant time to fund the purchase.