Which type of insurance pays a designated monthly amount to the creditor if the borrower becomes disabled?

Credit accident and health insurance is the type of insurance that specifically provides a designated monthly amount to the creditor in the event that the borrower becomes disabled. This type of insurance is designed to protect both the borrower and the lender; it ensures that the borrower does not fall behind on payments due to loss of income from disability, while simultaneously guaranteeing that the lender receives payments as agreed.

This insurance covers situations where the borrower is unable to work due to an accident or health issue, thus helping to manage the risks associated with extending credit. It acts as a safety net for both parties involved in the loan agreement.

In contrast, joint credit life insurance is intended to pay off a loan balance in the event of the death of one of the joint borrowers, rather than providing payments during a disability. Whole life insurance focuses on providing a death benefit and a cash value component, typically not directly related to specific monthly payment obligations tied to disability. Indexed universal insurance is a form of permanent life insurance that has a cash value that can grow based on a stock market index; again, it doesn't directly address monthly payment obligations due to disability. Hence, credit accident and health insurance is the correct choice as it is specifically structured to meet the needs of borrowers facing disabilities.