Not sure what this policy entails? Let us help you understand how it works and what benefits you have access to.
by: Wardah Majiet
What is Credit Life Cover?
Credit Life Cover settles all the outstanding debt obligations when the policy holder is no longer in a position to pay their debt obligations due to death, disability, retrenchment or dread disease. It is not a life policy that pays out to the policy holders beneficiaries. Instead the policy holder’s credit providers receive the full value of the credit life insurance policy.
How does Credit Life Insurance work?
When signing on a personal loan, vehicle finance or a bond – getting Credit Life Cover is as simple as adding the policy onto the loan. It is important to consider credit life insurance when taking out a credit agreement. Many consumers are oblivious to this type of policy.
When can I claim?
Credit Life covers retrenchment, disability, dread disease and death. The policy may exclude pre-existing conditions and provide benefits for which you cannot claim. For example, if you have a heart condition, it is important to find out if the policy will pay out if you die as a result of such a condition. To prevent unnecessary complications, the claim should rather be submitted as soon as the policy holder can. The policy holder can inform the insurer that they wish to claim and the insurer can inform them what is needed. However it is also equally important to ensure that all documents regarding the policy are up to date, and that the policy holder has a full understanding of the process.
Is it compulsory to have Credit Life Cover?
In terms of the NCA (National Credit Act), Credit Life Cover is a requisite and a credit provider can insist that the consumer takes out a credit life insurance policy for the duration of the credit agreement. The credit provider may offer the consumer the insurance but the decision ultimately lies with the consumer. Basically the consumer is well within their rights to obtain cover elsewhere or remain on the existing policy. A credit provider cannot request that the consumer buy cover from a specific insurer.
The credit provider should inform the consumer that they have a choice to choose which insurer they would like to buy insurance from.