What is Credit Life Insurance?

Credit life insurance is an optional protection product offered in the F&I office that pays off or pays down a customer's vehicle loan if they die during the loan term. It prevents the outstanding balance from becoming a burden on the customer's family or estate. Related products include disability or critical illness coverage that makes payments if the borrower cannot work due to injury or illness. In Canada these products are regulated as insurance, so they must be presented and sold in compliance with provincial insurance rules, and enrollment must be genuinely optional and clearly disclosed. Dealers should explain coverage, cost, and eligibility conditions honestly, since improperly bundled or misrepresented loan protection products are a frequent source of consumer complaints and regulatory scrutiny.