Credit Life Insurance Regulations Slash Maximum Costs
Consumers will no doubt benefit from the newly published Government Gazette Credit Life Insurance Regulations. The new regulations have lowered the maximums which can be charged in regard to this seldom claimed form of insurance.
The new regulations also ensure that consumers receive the type of cover they require and are not paying for cover they cannot make use of. The regulations also say what the minimum benefits that need to be offered by this type of cover must be.
This type of cover helps consumers (who actually claim!!!) when they lose their job or are permanently disabled. It also helps settle the debt entirely if a consumer dies (which protects both the consumer’s estate and the credit provider). For those who lose their jobs, they will be happy to know that this type of cover can now cover the minimum debt repayments for 12 months (or until the month the debt would be paid up or they get a job – whichever comes first). This is a very long time period and can remove one of the biggest stresses of losing your job.
‘This is a very long time period and can remove one of the biggest stresses of losing your job’
New Maximums (in 6 months time)
The regulations kick in in 6 months time and only set the maximum that can be charged. Service providers are welcome to compete by charging less than the maximum though the trend for many credit providers has been to charge as much as they are allowed to (which in the past was ridiculously high in some cases).
The new maximum which can be charged for things like for credit facilities and unsecured loans is now R4,50 per R1000 of the deferred amount (how much is still owed).
The new maximum rate for mortgages will be R2 per R1000 of the deferred amount.