Final answer:
Credit life insurance is purchased to pay off outstanding debt in case the insured person dies. It provides financial protection for loved ones and ensures that debts will be paid off.
Step-by-step explanation:
Credit life insurance is a type of insurance that is specifically designed to pay off an outstanding debt in the event of the insured person's death. It is typically purchased by individuals who have taken on a significant amount of debt, such as a mortgage or a car loan. By purchasing credit life insurance, the insured person can ensure that their debt will be taken care of even if they pass away before the debt is fully paid off.
For example, let's say a person has taken out a mortgage to purchase a house. They may choose to purchase credit life insurance to cover the outstanding balance of their mortgage in case they pass away before the mortgage is fully paid off. If the insured person dies, the insurance company will pay off the remaining balance of the mortgage, relieving the burden of the debt from their family.
In summary, people normally purchase credit life insurance to provide financial protection for their loved ones in the event of their death, ensuring that any outstanding debts will be paid off.