What is the primary purpose of a creditor group insurance?

The primary purpose of creditor group insurance is to protect the lending institution from financial loss due to a borrower's death or disability. This type of insurance is designed specifically to safeguard lenders by ensuring that if a borrower cannot fulfill their financial obligations because of an unexpected event, such as death or disability, the insurance policy will cover the outstanding loan amount. This mitigates the risk for the lender and helps maintain financial stability within their operations.

In contrast, options that mention life insurance for all employees or ensuring life insurance coverage for employees focus on broader employee benefits rather than the specific risk management needs of lending institutions. Additionally, covering medical expenses for employees pertains to health insurance offerings, which do not align with the purpose of creditor group insurance mechanisms aimed at lenders.