• Business Credit Insurance is credit insurance of sales and purchase and insures payment of credit extended by the business transactions that is against accounts receivable within agreed period.
• Consumer Credit Insurance is credit insurance that consumers purchase to insure payment of credit extended to the consumer that insurance pays lender or finance company.

Credit Insurance protects the supplier against buyer who fails to pay suppliers’ invoices. It protects against bad debt at high risk. The word Credit insurance is used to explain both business credit insurance and consumer credit insurance, Consumer credit insurance is a way for consumers to insure repayment of loans even if the borrower dies, becomes disabled, or loses a job. This type of insurance can be purchased to insure all kinds of consumer loans including auto loans, credit card debt, loans from finance companies, and home mortgage borrowing. But it is purchased by the consumer/borrower; the benefit payment goes to the company financing the purchase for extending the credit to the consumer.

Trade Credit Insurance also known as Business Credit Insurance is an insurance policy and risk management product that covers the payment risk resulting from the delivery of goods or services. Trade Credit Insurance usually covers a number of declared lists of buyers and pays an agreed percentage of an invoice or receivable that remains unpaid as a result of protracted default, insolvency or bankruptcy. Credit Insurance is purchased by suppliers, manufactures, dealer’s, stockiest, business establishments, to insure their invoices receivable from loss due to the insolvency of the debtors. This type of insurance form is viable for commercial units and not for individuals.

The policy premium rate is usually charged as depository lump sum at the initial stage and adjustable monthly, but calculated as a percentage of sales of that month or as a percentage of all outstanding receivables.

Trade Credit Insurance insures the payment risk of companies. Policy holders require a credit limit on each of their buyers for the sales to that buyer to be insured. In addition, credit insurance can also cover single transactions or trade with only one buyer. Receivable represents money owed by the buyer to the firm on the sale of products or services on credit. It is also called invoice amount and either printed typed and mailed or electronically delivered to the customer who in turn must pay it within an agreed time limit called credit terms or payment terms.