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Banks Finally Start To Talk About Credit Life Cover

When you take on credit the bank or other credit provider will inform you that you have to have insurance to cover the credit if you die. This is known as credit life insurance. The figures are normally fairly small each month so, you may not think too much of them but this is a major source of income for credit providers. Consumers also have the right (you will see it in the fine print of your contracts) to provide their own cover when taking out a loan or other credit. Few consumers, however, would even know where to look for such alternative cover. As a result, this is almost a “gimme” or automatic sale for the credit provider and their linked insurance.

Some credit providers rely so much on this income that they fight tooth and nail to stop people from switching to other insurance providers whenever they can, citing all sorts of reasons. African Bank is well known for this. They love the revenue and seldom see claims so, this has been a big cash cow for the banks over the years.

Over time these products have become more sophisticated and have had other benefits added to many policies. They may also cover things like disability cover or retrenchment cover. Some policies also cover temporary loss of income. Newer regulations have tried to refine and improve this type of insurance to provide a more consistent and reasonable product and cut down on abuses. It is important to realise that not all policies are the same and you may have cover or you may not. It depends on the contract.

‘some of the banks have now finally broken their usual information blackout about these products and are actively encouraging consumers to check and see if they could qualify to receive benefits’

Depending on the wording of the policies attached to your credit, you may now be able to get value for money out of all those small insurance payments over the years. In fact, some of the banks have now finally broken their usual information blackout about these products and are actively encouraging consumers to check and see if they could qualify to receive benefits due to temporary loss of income due to Covid-19 and the lockdown.

It seems someone at the banks has realised that they can rather shift the loss to the insurance arm and receive monthly repayments on debts rather than just extend blanket payment holidays that will see no income for the next few months (even if it is then recapitalised etc).

Call Now And Check

It is advisable that you contact all your credit providers right now and ask for copies of your insurance documents and afterwards inform them that you would like to lodge a claim (if your income has been affected by the lockdown). Particularly if you have been retrenched would this be advisable as most newer policies definitely include retrenchment cover and will pay your credit provider (each one only covers that specific loan or credit account) for many months. In some cases up to 12 months.

‘Be insistent even if you are told by someone on the phone that your policy does not have this type of cover. Ask for a copy’

Be insistent even if you are told by someone on the phone that your policy does not have this type of cover. Ask for a copy of the insurance policy for your records. Demand it. If you do eventually receive a copy (the banks and insurance people are going to be under strain right now as everyone asks). Feel free to ask your broker or a NCR registered Debt COunsellor to check the wording for you.

This is a good idea since it seems incredibly likely that the global economy is headed for one of the biggest recessions of all time reminiscent of the 1930s when millions of unemployed people lined up to receive food parcels and food stamps.

So, do it and do it now.