3 Reasons You Should Get a Credit Life Policy (Especially If You Have a Family)By The National Debt Review Center
Imagine you go to work and your boss tells you that he is sorry, but you’re out of a job. You’ve been laid off. For many people, this could be the death knell for their finances. If you have a family, then losing your income could be catastrophic.
We will outline 3 reasons why you should take a Credit Life Policy:
- A Credit Life Policy can help protect against those unexpected bills
- It is Easy to Apply
- It’s Affordable
Table of Contents
What is Credit Life Insurance?
Credit life insurance is insurance cover taken by a consumer taking credit. Credit life insurance insures the consumer’s obligations against the consumer’s death, disability, unemployment, or other events that may affect the consumer‘s ability to earn an income to service the debt. The insurance may be required by the credit provider as a pre-condition granting credit to the consumer.
When is credit life insurance taken?
It is generally taken at the time when the consumer takes credit. It may also be taken during the life of the credit agreement, normally when the consumer switches between insurers.
What kind of debts are covered by the credit life insurance?
Mortgages, personal loans, credit cards, store cards, instalment sale agreements for vehicles, furniture or appliances.
Are there any exclusions to the credit life insurance?
Yes, there are exclusions eliminating coverage for some types of risks. Generally, risks resulting from the consumer’s deliberate conduct, or for which the consumer is totally responsible for causing. Examples are exclusions resulting from suicide, alcohol and drugs. The exclusion may also be extraneous risks such as civil commotion, riots, unprotected strikes and self-inflicted injury. The consumer is not covered for these risks and the insurer is not liable to pay claims arising from them.
Below are examples of exclusions to credit life insurance – Credit life insurance may exclude or limit cover in relation to different covered events in the circumstances set
out below (please note that there is a complete list of these exclusions in the Credit Life Regulations):
- Loss of an income resulting from retrenchment within the first three (3) months after the commencement of cover under that credit life cover
- Lawful dismissal from employment as a result of wilful misconduct
- Resignation Retirement
- Participation in an unprotected strike
- Voluntary retrenchment or termination of employment
- Where a consumer is aware or received notice of termination of employment during three (3) months preceding the date of which cover under the credit life policy commenced.
Book a Credit Insurance Appointment
What Is the Cost of a Credit Life Policy?
A premium of R2,50per R1000 for mortgages in general and R2 per Rl000 for mortgages for affordable housing. The premium amount is set at R2 for consumers below 55 years and R2,50 for those above 55 years. A premium of R4,50per Rl000 of credit for personal loans, credit cards, store cards, overdrafts, vehicle loans and other loans.
When does the credit life policy end?
The policy must be kept for the term of the credit agreement. The policy falls away when the agreement terminates.
Are consumers forced to take credit life insurance offered by the credit provider?
No, the consumer can purchase insurance from a different insurer. The credit provider must be nominated as the loss payee in this policy to benefit from it when the insured event occurs.
If a consumer lost employment while under debt review. Is he/she allowed to claim credit life insurance?
Yes, if a consumer had credit life insurance against retrenchment or loss of income whilst in debt review.
Weighing the pros and cons of a credit life policy is important when making the decision to buy one. Ultimately, it is up to the individual or family to decide if the benefits of having a credit life policy outweigh the cost. For many people, especially those with families, the peace of mind that comes with knowing their loved ones will be taken care of financially in the event of their death makes paying for a credit life policy well worth it.