Credit life insurance is insurance coverage for consumers taking out credit, e.g. mortgages/home loans, vehicle finance, personal loans, and credit card debt.
What's Covered?
Generally, credit life insurance not only provides cover for your obligations against unemployment, but also in case of death, disability, and other events that may affect your ability to earn an income to service your debt. This can help in retrenchment (i.e. a full loss of income) and other scenarios involving a partial loss of income. The specific benefits, inclusions, and exclusions of credit life insurance vary based on the insurance product, so it's important to check your policy's terms and conditions and understand what you are covered for.
Credit Life Insurance and Debt Review
Credit life insurance will generally cover your debt review instalments for 12 months. Once your claim is approved, your credit providers will receive their monthly debt repayments directly from your insurer. This gives you time to find a new job or other source of income.
Is It Compulsory?
Some credit providers always require credit life insurance, e.g. African Bank and Capitec. Other providers might not require you to have credit life insurance. It's important to note that you don't have to use the credit life insurance product provided by your credit provider. For example, if you're taking out an African Bank loan, you don't need to use African Bank's credit life insurance. You can use any credit life product, as long as it adequately covers your loan, to your credit provider's (e.g. African Bank's) satisfaction.
Early in Debt Sage's debt review process, our experts will assess whether you have adequate credit life insurance and check that you are not over-insured, wasting money.