Credit Life Insurance

A life insurance policy designed to pay off a borrower's debt if that borrower dies. The face value of a credit life insurance policy decreases proportionately with an outstanding loan amount as the loan is paid off over time until both reach zero value.

Investopedia Says:
Credit life insurance can protect a person's dependents. It may also be required by some lenders; therefore, it is important to read the fine print of any loan agreement to determine whether credit life insurance is required.

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Individual or group life insurance payable to a lender upon the death of a borrower in the amount of the outstanding balance of the loan.

Insurance issued to a creditor (lender) to cover the life of a debtor (borrower) for an outstanding loan. If the debtor dies prior to repayment of the debt, the policy will pay off the balance of the amount outstanding. Credit life insurance is sold on a group or individual basis, and usually is purchased to cover small loans of short duration. When issued under a group policy, a certificate is issued to the debtor, the master policy being issued by the creditor. The face value of a credit life insurance policy decreases in proportion to the reduction in the loan amount until both equal zero.

A policy that retires a debt upon the death or (sometimes) disability of the borrower. Contrast with Mortgage Insurance.
Example: Charles took out a credit life insurance policy that will pay certain debts in the event of his death.