Credit Insurance protects against which of the following risks?

Credit insurance is designed to mitigate the risk associated with a debtor's inability to repay a loan or credit obligation, particularly due to unforeseen circumstances such as illness, job loss, or disability. When a borrower is faced with such unexpected events that hinder their ability to make payments on their debts, credit insurance can provide the necessary support, covering the outstanding balance or making payments on behalf of the debtor. This financial safety net helps protect lenders against default while giving borrowers peace of mind during challenging times.

The other options pertain to different financial risks that are not covered by credit insurance. For example, the reduction of a policy's cash value is generally related to life insurance or investment products rather than credit. Similarly, losing income due to retirement and interest rate increases affecting loan payments are distinct financial issues that may require different types of insurance or financial planning but are not addressed by credit insurance specifically.