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Millions of South Africans aren't aware they have credit life insurance cover

1 October 2020 7:38 PM
Tags:
The Money Show
Bruce Whitfield
Wendy Knowler
consumer protection
credit life insurance
Financial Sector Conduct Authority
FSCA
credit life insurance policy

Over a quarter of credit life insurance policy holders have no idea they're paying for that protection, reports Wendy Knowler.

Do you ask questions and check all the paperwork when you sign up for a new store account?

Perhaps you're one of the 5 million South Africans who, unknowingly, took out a credit life insurance policy.

A survey by the Financial Sector Conduct Authority (FSCA) revealed that 26% of credit life policy holders have no idea that they have that protection.

This also means they won't know they have this claim option to help them if they land in financial trouble.

Client signing a contract. Image: pixabay.com

In the majority of these cases, people signed up for the policies when opening store accounts or taking out unsecured personal loans.

What happens at the point of sale is problematic and constitutes a longstanding problem says Caroline da Silva, the FSCA's Divisional Executive of Regulatory Policy.

Bruce Whitfield interviews consumer ninja Wendy Knowler.

It's not surprising to me because I've spent many years tracking this... It's around the store credits, when people take out a loan for a fridge or a bed and it's this whole wad of documents and they aren't reading through everything and it isn't being explained to them... Another big danger area is unsecured personal loans.

Wendy Knowler, Consumer journalist

It's a tragedy that 26% of people who sign up don't know they can claim when they're in dire straits, she says.

Credit life insurance is designed to cover a consumer's monthly payments on their credit agreements, be it a a personal loan, credit card, car finance even if you opt for it.

Wendy Knowler, Consumer journalist

If they're retrenched, disabled, or die... it just gets written off. In the recent National Credit Act amendment these credit life policies have to cover loss of income as well, which was perfect for the pandemic.

Wendy Knowler, Consumer journalist

There needs to be education around this and Caroline da Silva said the hot, burning issue is these credit providers really need to simplify and simplify again, the wording of their contracts and tailor these products for people's actual needs.

Wendy Knowler, Consumer journalist

For more detail, listen to the conversation on The Money Show:


This article first appeared on 702 : Millions of South Africans aren't aware they have credit life insurance cover


1 October 2020 7:38 PM
Tags:
The Money Show
Bruce Whitfield
Wendy Knowler
consumer protection
credit life insurance
Financial Sector Conduct Authority
FSCA
credit life insurance policy

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