Final answer:
The death proceeds of a credit life insurance policy are paid directly to the lender, to cover the remaining debt balance if the borrower passes away before the debt is fully repaid.
Step-by-step explanation:
The death proceeds of a credit life insurance policy are typically paid to the person or entity that incurs a financial loss upon the death of the borrower. In the case of credit life insurance, this is the lender. Credit life insurance is designed to pay off a borrower's debt if the borrower passes away before the debt is fully repaid, thereby ensuring that the lender receives the outstanding money owed.
Whenever the policyholder dies, the insurance company pays out the death benefit directly to the lender to cover the remaining balance of the debt. As such, option B, 'Lender', is the correct answer.