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.

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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 >>
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