Credit Life
How does Credit Life Cover work?
The way Credit Life Cover operates is by serving as collateral for your loan, such as a mortgage.
This coverage includes:
Death coverage, which pays off the remaining loan balance Permanent disability coverage, which pays off the remaining loan balance Temporary disability coverage, which pays the loan instalments for up to 12 months or until the end of the loan term, or until the policyholder recovers Retrenchment coverage, which pays the loan instalments for up to 12 months or until the end of the loan term, or until the policyholder finds new employment. This benefit is not applicable if the policyholder is self-employed.
Credit Life Insurance in South Africa
Credit life insurance is a type of insurance that provides financial protection to borrowers and their families in the event of death, disability, or retrenchment. In South Africa, credit life insurance is a requirement for most lenders and is often included as part of the loan agreement.
How Credit Life Insurance Works
Benefits of Credit Life Insurance
Financial Protection:
Credit life insurance provides financial protection to borrowers and their families in the event of death, disability, or retrenchment.
This can help to ease the burden on family members and provide peace of mind to borrowers.
Legal Requirement:
Credit life insurance is a legal requirement for most lenders, so borrowers need to have coverage in place in order to be eligible for a loan.
What are the benefits for you?
- The coverage value does not decrease over a specific period
- Can be kept as whole-life personal coverage even after the loan is fully paid
- The remaining funds can be given to a nominated beneficiary after the loan is settled
- Ready-to-use package designed specifically for this purpose, easy to understand and apply.
Difference Between Credit Life Insurance and Life Insurance
Credit Life Insurance
Purpose
To cover outstanding debt in the event of the borrower's death, disability, or retrenchment
Coverage
Typically limited to the outstanding debt amount
Cost
Premiums are typically lower than life insurance premiums, but are more limited.
VS
Life Insurance
Purpose
To provide financial protection to the policyholder's beneficiaries in the event of their death.
Coverage
Coverage can be much broader.
Cost
Premiums are typically higher than Credit Life Insurance premiums, but are more broader
