What type of insurance is designed to cover debts and loans?

The correct choice is group credit life insurance because it specifically caters to individuals who have outstanding debts or loans. This type of insurance is usually offered through financial institutions, such as banks or credit unions, and is intended to pay off a borrower's debt in the event of their death. It serves to protect the lender's financial interests and assures that outstanding balances on loans are settled without burdening the borrower's family or estate.

In contrast, whole life insurance provides lifelong coverage with a cash value component, but it is not specifically tailored to cover debts. Similarly, term life insurance offers coverage for a set period but is not specifically linked to loans or debts; it primarily provides a death benefit to beneficiaries. Universal life insurance allows for flexible premiums and death benefits but, again, is not designed to cover any specific debts in a targeted manner like group credit life insurance. Thus, group credit life insurance stands out as the solution specifically aimed at debt protection.