What type of insurance pays off existing loans upon the death of the insured?

The correct choice highlights the specific purpose of Credit Life Insurance, which is designed to pay off existing loans if the insured passes away. This type of insurance is closely linked to debts like personal loans or credit debt, ensuring that the financial burden does not fall on the insured's estate or beneficiaries after their death. By settling the outstanding loan balance, Credit Life Insurance can provide peace of mind to the insured, knowing that their death won't lead to financial strain for their loved ones due to unpaid loans.

Mortgage Protection Insurance, while similar, is specifically intended to cover the balance of a mortgage loan, whereas Credit Life Insurance applies to a wider range of debts. Term Life Insurance and Whole Life Insurance are broader life insurance policies that provide a death benefit, but they do not have the specific function of discharging debt obligations. Instead, these policies can be designated for various uses by beneficiaries after the insured's death, but they don't inherently cover existing loans like Credit Life Insurance does. Thus, understanding that Credit Life Insurance serves the specific role of paying off debts upon the death of the insured clarifies why it is the correct choice in this context.