Here's what South African banks are offering when it comes to credit insurance
“If a customer is permanently employed and they become unemployed or are unable to earn an income due to contracting COVID-19 or due to measures put in place to prevent the spread of the virus, all their obligations under the credit agreement that become due and payable can be paid either for 12 months during the remaining repayment period of the credit agreement, or until they are able to find employment or earn an income whichever is the shorter period.”
Full-time workers now on unpaid leave or unable to earn an income due to the travel ban, have valid claims.
Those who remain in full-time employment but their income has reduced “by a variable percentage because of Covid-19” will not have a valid claim.
Credit life cover can be used to service unsecured loans, “where there is a valid claim” - even if they took out their loan before August 2017, as the bank “recognises the importance of assisting all South Africans during this trying time”.
Their credit life policies will only pay out for three months.
“Retrenchment benefits under credit life policies will pay the minimum installment on customers’ credit agreements for three months if they are unable to earn an income.” “This is applicable to all credit life claims lodged between 1 April 2020 and 30 June 2020."
Capitec’s credit insurance policies taken out since 10 August 2017 cover the inability to earn an income, along with the usual death, permanent or temporary disability, unemployment and retrenchment, so those income has dried up due to Covid-19 would have a valid claim.
If the terms of the loan granted by Standard Bank required compulsory comprehensive credit life insurance cover - ie all Personal Term Loans and Home Loans to customers with a combined income of less than R25 000 — and the loan was granted after 9 August 2017, installments are covered for up to 12 months in the event of you becoming unable to earn any income.
Those who received the applicable Housing Loans and Personal Term Loans prior to 9 August 2017, Standard Bank will provide discretionary relief in respect of such customer's credit agreement installments for up to three months - April to June - if a customer is unable to earn any income.
This discretionary relief will be available in the period between 1 April 2020 to 30 June 2020 to assist our customers during these unprecedented times. These installment relief payments fall outside the credit life insurance policies.
“Where a customer has chosen to purchase a voluntary Standard Bank credit life insurance policy linked to other lending products such as Home Loans, Credit Cards, Vehicle and Asset Finance, Student Loans and Revolving Personal Loans, they should review their policy terms to understand the events that they are covered for.”
We’ve got you covered! If the 21-day lockdown has you facing retrenchment, short time or compulsory unpaid leave, our credit life insurance may be the relief you need on your monthly loan repayments.” The Ts and Cs revealed that to be payments for 12 months. In other words, a total break from repayments for up to a year. At no cost.
We pay for many insurance policies that we never claim from. This is one that will help a lot of people at this time.Wendy Knowler, Consumer journalist
IMPORTANT TO NOTE:
- You must make a claim before missing a payment
- If you make a claim on your credit life policy on your credit card, you won’t be able to use your credit card in the months that your installments are being paid by the policy.
- The best way to check whether or not you have credit insurance is to check your bank statements to see if you have been paying premiums. In the case of store cards, this is often described as “balance protection”.
Please note: This information is subject to change as companies update their policies in response to the extent to which the Covid-19 virus escalates.
Listen to the segment on ConsumerTalk with Pippa Hudson:
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