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. Canceled Check

    A check that has cleared the depositor's account and has been ...
  3. Cancelable Insurance

    This is insurance that may be canceled, at any time, by the insured ...
  4. Lost Policy Release (LPR)

    A statement releasing an insurance company from its liabilities. ...
  5. Surrender Rights

    A right to cancel an annuity or life insurance contract in exchange ...
  6. Surrender Charge

    A fee levied on a life insurance policyholder upon cancellation ...
Related Articles
  1. Trading

    Simulator How-To Guide: Cancelling Orders

    Depending on the order type and the time of day, a player may have the capability to cancel an order from being executed. Please realize that limit and stop orders can always be canceled prior ...
  2. Investing

    Explaining Good ‘til Canceled

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

    Understanding Your Insurance Contract

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

    Tips for Insuring Your Salary

    Those with high incomes really can’t afford to be without disability insurance. Here's why.
  5. 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.
  6. Markets

    Credit Default Swaps: An Introduction

    This derivative can help manage portfolio risk, but it isn't a simple vehicle.
  7. Personal Finance

    How Much Life Insurance Should You Carry?

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

    Exploring Advanced Insurance Contract Fundamentals

    Understanding your contract can help you protect our family's financial security.
  9. 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.
  10. Financial Advisor

    Tips for Helping Clients with Life Insurance Needs

    Life insurance needs will likely change over the client’s lifetime and again financial advisers can provide an objective sounding board.
RELATED FAQS
  1. Can your insurance company cancel your policy without notice?

    Learn about your rights as an insured when it comes to your insurance policy being canceled, including how to access your ... Read Answer >>
  2. 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 >>
  3. What happens when a company buys back its shares?

    When a company performs a share buyback, there are a few things that the company can do with the securities they buy back. ... Read Answer >>
  4. What is a tax-free 1035 Exchange?

  5. 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 >>
  6. Can companies insure their accounts receivable?

    Understand what credit insurance is and how it protects companies against payment problems they may encounter in trying to ... Read Answer >>
Hot Definitions
  1. Duration

    A measure of the sensitivity of the price (the value of principal) of a fixed-income investment to a change in interest rates. ...
  2. Dove

    An economic policy advisor who promotes monetary policies that involve the maintenance of low interest rates, believing that ...
  3. Cyclical Stock

    An equity security whose price is affected by ups and downs in the overall economy. Cyclical stocks typically relate to companies ...
  4. Front Running

    The unethical practice of a broker trading an equity based on information from the analyst department before his or her clients ...
  5. After-Hours Trading - AHT

    Trading after regular trading hours on the major exchanges. The increasing popularity of electronic communication networks ...
  6. Omnibus Account

    An account between two futures merchants (brokers). It involves the transaction of individual accounts which are combined ...
Trading Center