If credit life insurance is terminated before the maturity date, what happens to any unearned premium?

When credit life insurance is terminated before the maturity date, any unearned premium is refunded to the debtor. This practice is in line with standard insurance principles, which dictate that policyholders should not be left at a loss for any premium amounts already paid for coverage that is no longer in effect.

In essence, since the debtor has paid for the insurance coverage but did not utilize the full term of the policy, they are entitled to receive the portion of the premium that corresponds to the unused period. This ensures fairness in the transaction, allowing the debtor to recover funds for insurance coverage that they did not fully benefit from, thus promoting consumer protection and trust in insurance practices.

The other options, such as forfeiting the premium to the insurer, applying it to another policy, or rolling it over into a savings fund, do not align with the typical legal standards and consumer protection laws regarding insurance refunds in New Jersey.