If a policy is terminated, what happens to the insurance coverage for debts already insured?

When a policy is terminated, the insurance coverage for debts that were already insured continues for the period that was paid for by a single premium. This means that even though the policy is no longer active in terms of new coverage being initiated, any existing debts that were covered continue to be insured until the end of the period that has already been fully paid for.

This approach ensures that the borrower is not left unprotected for debts incurred prior to termination, acknowledging that they have paid for a specific duration of coverage upfront. Therefore, it provides a level of consumer protection, giving the insured peace of mind that their prior commitments remain covered despite the policy termination.

In contrast, the other choices imply immediate cessation of coverage or an automatic transfer, which does not align with how many credit insurance policies operate regarding previously insured debts. This distinction is important for understanding how credit insurance functions during policy termination scenarios.