Why you need credit life insurance

Credit life insurance covers your debt if you can’t pay it because of disability, illness or death.

Why you need credit life insurance_desktop

When life takes an unexpected turn, having a safety net can make all the difference. Credit life insurance is designed to protect your repayment plans in the event of life’s uncertainties and provides extra security for you and your family.

What is credit life insurance?

Credit life insurance is a type of insurance policy that’s linked to your loans or debts. It helps protect you and your family by covering your outstanding debt if something unexpected happens. If you have a credit card, personal loan, or access facility, credit insurance can help. It covers your debt if you’re unable to make monthly payments due to death, disability, or unemployment. Think of credit life insurance as a safety net for you and your credit provider. Without it, if you pass away or become disabled, your family or dependents face the burden of your debt. With credit life insurance, the insurance company pays off the loan or outstanding credit balance on your behalf, easing the financial pressure on your loved ones.

How does credit life insurance work?

Credit life insurance premiums are calculated based on your outstanding balance. For every R 1000 you owe, you pay a set monthly premium. As your debt decreases, so do your premiums. If you take out a policy, you’re covered immediately for death and disability, which means you don’t have to worry about being left unprotected in an emergency.

What credit life insurance covers

Credit life insurance typically covers four key events:

  • Death: If you pass away, your full outstanding debt balance will be paid off. This ensures that your family is not responsible for your debt if you're no longer around
  • Permanent disability: If you become permanently disabled and can’t work, credit insurance will pay off your full debt. This allows you to focus on your recovery without worrying about your finances
  • Temporary disability: If you suffer a temporary disability that keeps you from working, credit life insurance will cover up to 12 monthly repayments, easing the burden as you regain your ability to work
  • Unemployment: If you lose your job or can’t earn an income (other than due to disability or retrenchment), the policy will cover up to 24 monthly repayments. There is a 3-month waiting period for retrenchment or job loss claims

What credit insurance doesn’t cover

While credit life insurance offers valuable protection, it doesn't cover:

  • War or civil unrest: If you’re involved in war, civil unrest or any form of military conflict, credit insurance won’t pay out
  • Hazardous activities: You won’t receive benefits if you’re injured or disabled while participating in hazardous activities, such as extreme sports. The policy also excludes cover for injuries or deaths caused by nuclear, biological or chemical risks
  • Criminal activity: If your injury or death is linked to criminal activity, the policy will not provide cover
  • Voluntary job loss: If you resign, retire or leave your job voluntarily, the policy won’t cover your debt. Similarly, if you’re dismissed for misconduct or participate in an unprotected strike, your claim will be denied

Benefits of credit life insurance cover

  • Peace of mind: Your debt is covered if you pass away or become disabled, relieving your loved ones from financial stress
  • Affordable: Premiums decrease as your loan balance reduces, making it more affordable over time
  • Reduces risk: If you can’t make repayments due to death or disability, it reduces the risk of falling behind on your loans. This prevents your credit score from taking a hit and ensures the credit provider is repaid
  • No medical tests: Medical exams or detailed health information aren’t usually required, making it more accessible, especially for those with pre-existing conditions
  • Flexible cover: Covers a variety of debts like personal loans, car loans, and credit cards. It may even cover multiple debts at once
  • Quick payouts: Payouts are fast, ensuring your debt is settled quickly after an insured event

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