Arkansas Life and Health Insurance Practice Exam 2025 – Complete Study Guide

Question: 1 / 400

Which of the following statements regarding credit insurance is not true?

Benefits are paid to the creditor

In credit insurance, the benefits are typically paid to the debtor or the beneficiary designated by the debtor, not directly to the creditor. This insurance is designed to help pay off or reduce a specific debt in the event of the debtor's death or disability. Therefore, the statement that benefits are paid to the creditor is not true.

Regarding the other options:

- Option B is true as credit insurance coverage is usually capped at the total debt amount.

- Option C is also accurate as certificates of coverage are generally required to be given to the debtor around the time the debt is incurred.

- Option D is correct as credit insurance is frequently offered as mortgage protection, intended to pay off the mortgage balance in the event of the insured's death.

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Coverage may not exceed the total debt

Certificates of coverage must be delivered to the debtor no later than the date upon which indebtedness is incurred

It is often offered as mortgage protection

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