Debt Cancellation Contract

DEFINITION of 'Debt Cancellation Contract'

A contract in which a bank agrees to cancel all or part of a customer's obligation to repay a loan due to an event such as death, disability or involuntary loss of employment. A debt cancellation contract is an alternative to a life insurance plan.

BREAKING DOWN 'Debt Cancellation Contract'

Debt cancellation contracts are a product that banks offer in lieu of credit insurance plans for credit cards and other forms of bank credit. Instead of credit insurance premiums, the customer pays the bank a fee.

RELATED TERMS
  1. Cancellation Provision Clause

    It is a provision in an insurance policy that permits an insurer ...
  2. Lost Policy Release (LPR)

    A statement releasing an insurance company from its liabilities. ...
  3. Surrender Charge

    A fee levied on a life insurance policyholder upon cancellation ...
  4. Credit Insurance

    Credit insurance is a type of life insurance policy purchased ...
  5. Immediate Or Cancel Order - IOC

    An order to buy or sell a security that if not immediately filled, ...
  6. Payment Protection Plan

    An optional service that lets a disabled or unemployed consumer ...
Related Articles
  1. Investing

    Explaining Good ‘til Canceled

    A good ‘til canceled order remains in effect until an investor cancels a specific trade or executes it.
  2. Personal Finance

    Understanding Your Insurance Contract

    Learn how to read one of the most important documents you own.
  3. Personal Finance

    Tips for Insuring Your Salary

    Those with high incomes really can’t afford to be without disability insurance. Here's why.
  4. Markets

    Insuring A Credit Card Against Job Loss

    Involuntary unemployment credit card insurance may help if you're laid off, but it may just help your credit card company.
  5. Personal Finance

    How Much Life Insurance Should You Carry?

    Learn how much - if any - insurance you really need.
  6. Personal Finance

    Exploring Advanced Insurance Contract Fundamentals

    Understanding your contract can help you protect our family's financial security.
  7. Retirement

    Life Insurance: Putting A Price On Peace Of Mind

    Would your death leave loved ones financially stranded? Find out how to ease your mind and keep them protected.
  8. Personal Finance

    Consolidating Debt: What If You Have Bad Credit?

    Getting a debt consolidation loan is more difficult when you have bad credit. But it could still help put you on the road to improving your credit score.
  9. Personal Finance

    Should You Borrow From Your Life Insurance?

    A loan against the cash value of your life insurance isn't the best way to raise money – but sometimes it's the best choice you have. How to decide.
  10. Retirement

    Why Own Life Insurance in a Qualified Retirement Plan?

    What are the pros and cons of owning cash value life insurance in a qualified retirement plan?
RELATED FAQS
  1. Could I sell my shares and avoid the "cancellation of debt" tax hit on next year's ...

    I own shares of an MLP that is in trouble. This year I got hit with a tax bill for a "canc... Read Answer >>
  2. Can your insurance company drop you after an accident?

    Learn how auto accidents can lead to insurance premium increases or policy cancellations, and why high-risk drivers are more ... Read Answer >>
  3. Will my student loan be canceled (discharged) if I die?

    Federal loan servicers discharge debts when borrowers die to protect co-signers and spouses, but private lenders are free ... Read Answer >>
  4. What is the difference between forward and futures contracts?

    Fundamentally, forward and futures contracts have the same function: both types of contracts allow people to buy or sell ... Read Answer >>
  5. What is the difference between "closed end credit" and a "line of credit?"

    Find out about the difference between closed-end credit and lines of credit, and how both closed- and open-end credit is ... Read Answer >>
  6. How long do typical debt management plans take to pay off debt?

    Find out more about how debt management plans are administered and what circumstances determine how long a management plan ... Read Answer >>
Hot Definitions
  1. Sell-Off

    The rapid selling of securities, such as stocks, bonds and commodities. The increase in supply leads to a decline in the ...
  2. Brazil, Russia, India And China - BRIC

    An acronym for the economies of Brazil, Russia, India and China combined. It has been speculated that by 2050 these four ...
  3. Brexit

    The Brexit, an abbreviation of "British exit" that mirrors the term Grexit, refers to the possibility of Britain's withdrawal ...
  4. Underweight

    1. A situation where a portfolio does not hold a sufficient amount of a particular security when compared to the security's ...
  5. Russell 3000 Index

    A market capitalization weighted equity index maintained by the Russell Investment Group that seeks to be a benchmark of ...
  6. Enterprise Value (EV)

    A measure of a company's value, often used as an alternative to straightforward market capitalization. Enterprise value is ...
Trading Center