Many consumers have been kept in the dark about the ins and outs of credit insurance in South Africa and how it can be particularly useful in the wake of COVID-19.
If you have at any stage purchased something on credit, it’s likely that you have also purchased credit life insurance knowingly or unknowingly.
Credit life insurance is a type of insurance product that covers your monthly installments under a credit agreement when your ability to pay the installments is impaired for any reason.
Given the current circumstances related to COVID-19, many South African residents face crippling uncertainty about their financial future and credit life insurance can be particularly helpful during these times.
However, it’s extremely important for consumers to understand their position when it comes to credit insurance in South Africa. In other words, do you have credit insurance and if so, how can it help you?
As a consumer, it’s important that you fully understand what you are signing up for before you sign anything.
In the past, credit providers have been put under the spotlight for incorrect or inappropriate sale of credit insurance in South Africa.
For example, retrenchment and disability cover has been sold to pensioners and self-employed consumers – cover that these individuals firstly, do not need and, secondly, will not be able to claim for, despite them paying for it.
In other cases, consumers had been signed up for credit insurance and were held liable for payment thereof but were not informed by their credit provider.
This meant that these consumers were unaware of their credit insurance and their right to claim for debt cover in the event of their death, retrenchment or disability.
It was identified that few claims were being made on credit insurance policies in South Africa; a direct reflection of the fact that consumers were unaware that they are insured.
Consumers can benefit from following some of these tips regarding credit insurance:
Understanding credit insurance in South Africa is important for all consumers who currently have or plan to apply for credit.
Credit life insurance can help alleviate financial pressure related to settling the outstanding debt in the event of your death, retrenchment or disability.
For assistance with understanding an insurance policy or credit agreement before you sign it, please feel free to contact our attorneys in Johannesburg and Cape
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