Massachusetts Life Producer Practice Exam

Who is typically responsible for paying the premium on group credit life insurance?

1. The insurance company

2. The employer

3. The borrower

4. The beneficiaries

The correct answer is: The borrower

In group credit life insurance, it is the borrower who is typically responsible for paying the premium. This type of insurance is designed to pay off a borrower's debt in the event of their death, thus protecting lenders and ensuring that the borrower's obligations are met. The borrower pays the premium as part of their loan agreement, ensuring that the insurance coverage is in place for the duration of the loan. This arrangement is beneficial to both the borrower, who secures their financial responsibilities, and the lender, who can rely on the insurance to cover any outstanding debt in the event of the borrower's demise. While the other parties involved—such as the insurance company, the employer, and the beneficiaries—have roles in the overall process, they do not directly contribute to the premium payment for group credit life insurance. The insurer provides the coverage, and any employer involvement would typically pertain to employee benefits rather than credit insurance. Meanwhile, beneficiaries receive the benefits upon the death of the insured party, but they do not make premium payments.