Disability Income✓ Verified · outline & fact-checked · Sep 2026Difficulty 1/5
Credit disability insurance is designed to:
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Answer & full 3-part explanation (select an option above, or peek)
Why A is correct
Credit disability insurance is a limited-benefit product sold in connection with a loan: if the debtor becomes disabled, the policy makes the scheduled loan payments, often up to a stated maximum benefit period and amount. The coverage is typically underwritten at the point of sale, the premium is frequently added to the loan payments, and the benefit decreases as the loan balance is paid down. Because it addresses a specific debt, it is classified as a limited disability product rather than comprehensive income replacement.
Why the other options are wrong
- B) Medical expenses are covered by health insurance; credit disability addresses the debt payments.
- C) Retirement income is an annuity or pension function, not the purpose of credit disability coverage.
- D) Tax obligations are not the target of credit disability; it protects the lender's repayment stream and the debtor's obligation.
Memory hook
Credit disability keeps the loan payments flowing while the borrower is down. Debt-specific, benefit-limited.