Who is responsible for paying the premiums for a credit life policy?

In a credit life insurance policy, the responsibility for paying the premiums typically falls on the policyowner, which is usually the debtor. However, the provision is designed to cover the outstanding loan balance in the event of the debtor's death, meaning that while the debtor pays the premiums, the creditor is the one that ultimately benefits from the policy.

The policyowner is the one who enters into the contract and maintains the policy, which includes making premium payments. This structure allows the debtor to protect both themselves and their lender, ensuring the loan is paid in the unfortunate event of their death. In this arrangement, the debtor is often the individual obtaining the credit life insurance, while the creditor is merely the beneficiary of the policy when the debtor passes away.

In contrast, the creditor alone would not take on the responsibility of paying premiums since they do not hold the policy. The debtor as the insured does not solely bear this burden without the creditor's arrangement, and the insurer is not liable for premium payments as it only provides coverage. Thus, identifying the policyowner as the one responsible for premium payments reinforces the principle of credit life insurance as a protective measure for both parties involved in the loan transaction.