What type of insurance pays a designated monthly amount to the beneficiary if the borrower becomes disabled?

Credit accident and health insurance is specifically designed to provide financial protection in the event that a borrower becomes disabled due to an accident or illness. Under this type of insurance, if the insured individual is unable to make their loan payments because of a disability, the policy will pay a designated monthly amount to cover those payments. This helps ensure that the borrower does not fall behind on their financial obligations during a challenging time.

Life insurance, while important, functions differently by providing a lump sum payout upon the death of the insured, rather than addressing disability-related monthly payments. Homeowners insurance protects against property damage and liability, making it unrelated to the needs covered by disability insurance. Auto insurance primarily provides coverage for vehicle-related accidents and damages, which again does not support individuals in the event of a disability impacting their income or loan obligations. Thus, credit accident and health insurance is the most appropriate choice for providing ongoing financial support during a borrower’s period of disability.