NCR want Credit Life premiums capped
When a consumer takes credit a creditor will offer them a type of insurance called credit life insurance. This insurance will settle the debt if the consumer dies. This protects both the consumers estate and the creditor.
There is however no limit on the rate that the creditor can charge for such insurance. In most cases the creditors “in house” insurance is much higher than that offered by other organisations. Since the inception of the National Credit Act credit providers have had to mention to consumers that they can organise their own insurance on their credit. This is something hardly anyone ever does.
The NCR and FSB have been investigating the very high premiums and low claim rates on such policies. The NCR now want to try get creditors to limit their rates to less than R4 per every R1000 they give out on credit. At present there is however no authority for the NCR to do so. This may change in the future however if the NCR are granted additional powers under the Credit Amendment Bill later this year.
Did You Know?
If you lose your job many Credit Life insurance policies also have a provision to pay your monthly installments for several months (not always). If this happens to you ask your bank for more info (in writing) straight away.