Group credit insurance offers coverage to the lender, usually a bank or finance company, where the payout is the outstanding principal amount.

• A. The borrower
• B. The lender
• C. The insurer
• D. The employee

Answer: (B)

Group credit insurance is designed to protect the lender’s loan by ensuring the loan balance is paid off if something happens to the borrower. The payout goes to the lender to retire the outstanding principal, guaranteeing the loan won’t be left unpaid for the lender’s loss. While the borrower is typically the insured person under such policies, the benefit is paid to the lender so the loan is settled. The insurer is the company providing the coverage, and the employee isn’t involved in the payout.