Group creditor insurance is insurance coverage for creditors that protects them against the risk that their debtors will pass away before repaying their remaining loan balances. Group creditor insurance hedges creditors from massive losses that could ensue if a significant number of their debtors die. This type of insurance often will repay the creditor for the full remaining balance of the outstanding loans.
Group creditor insurance is called "group" creditor insurance because it insures creditors from losses relating to groups of debtors as opposed to insuring each debtor individually. Often, these groups can be quite large. Insuring groups of borrowers can be particularly helpful for financial institutions such as credit card companies who may have thousands of customers. Group creditor insurance can be helpful for banks and other lenders who give loans for mortgages, college tuition, automobiles, or for many other reasons.
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