Under a typical credit life arrangement, who is the beneficiary that receives the policy proceeds?

Why A is correct

In credit life insurance the creditor that holds the loan is the party protected against the borrower's death, so the creditor is designated as beneficiary and receives proceeds up to the unpaid loan balance. The borrower is the insured whose life is covered; the benefit exists to extinguish the debt, and any remainder after the balance is paid would be handled according to the policy and the loan terms. The New Jersey Department of Banking and Insurance supervises how this creditor-oriented coverage is marketed to state consumers.

Why the other options are wrong

• B) The estate is not the designed payee; the coverage runs to the creditor to retire the debt, not to enrich the estate.
• C) The borrower's beneficiary designation is the feature of personally owned life coverage, not of credit life tied to a loan.
• D) Unclaimed-property rules have no role in a functioning credit life claim; the creditor's interest is the insurable one.

Memory hook

The lender holds the beneficiary's seat: credit life pays the debt-holder first.