Which type of insurance is generally used as a form of group credit life insurance?

Decreasing term insurance is specifically designed to cover debts that diminish over time, making it a suitable option for group credit life insurance. In such arrangements, the insurance typically covers a loan or a mortgage, and as the outstanding balance on that loan decreases, so does the insurance coverage amount. This aligns perfectly with the concept of protecting a lender's interest in the event of a borrower's death.

In group credit life insurance, multiple borrowers may be included in a single policy, and the coverage will decrease as the debt is paid down. This ensures that the payout will only be equal to the remaining balance of the debt, thereby minimizing unnecessary premiums.

Other types of insurance, like level term insurance, provide a consistent death benefit over a specified term, which does not correspond as well with the declining balances of loans. Whole life and universal life insurance are permanent policies intended for long-term coverage and savings, which also do not align with the temporary, decreasing coverage needs associated with credit life insurance.