Credit Life Insurance vs. Term Life Insurance

Credit life insurance is an insurance policy that pays all the debts you owe when you die. Term life insurance, on the other hand, is an insurance policy that gives the death benefit of your policy to your stated beneficiary if you die within the agreed period. If you are wondering which policy to purchase, this article is for you. Here we will compare the different features of both policies. If these policies are similar in any way, we will highlight it.


A credit life insurance pays all the debts you owe after your death. Hence, your debt does not transfer to your dependents. In contrast to the credit life insurance, the term life insurance policy ensures your dependents are cared for financially by paying them death benefits.


While credit life insurance covers the amount you owe after dying, the term life insurance allows you to choose how much coverage you want.


The recipient of the credit life insurance is the person you owe money. After your death, the insurance company pays the person you owe. However, with term life insurance, your dependent receives the death benefits from your insurance provider.

Cost of insurance

A credit life insurance policy is expensive to purchase and maintain. The term life insurance is affordable and is cheaper if you are young and healthy.

Application and purchase of policy

The process of buying a credit life insurance policy is easier than that of a term life insurance policy. Credit life insurance does not require you get a medical examination. However, a medical exam is needed to purchase term life insurance.

Value of your policy

The face value of your credit life insurance reduces as you pay off your debts. The policy covers only the amount you owe. Even if you pay off most of the debts, the premium remains the same. Unlike credit life insurance, term life insurance remains at the same value stated in your contract.