Every person who applies for any form of debt (from a Credit Provider) is required to take out credit life insurance to cover outstanding debt in the event of primarily death, but also disability and retrenchment.
It includes all debt:
* bond
* car
* loan(s)
* overdraft
* credit card(s)
* furniture and clothing accounts, etc.
Consumers will be required to pay a monthly credit life premium for debt at each respective Credit Provider - often escalating to hundreds of Rand's every month.
Credit Life Insurance is generally a mandatory (extra) charged to debt, enabling lenders to recover money owed to them by borrowers, if the borrower dies before repaying the full loan.
IMPORTANT INFORMATION from the NCR (National Credit Regulator)
NCR CIRCULAR 08 0F 2015 – INSURANCE PROCESS UNDER DEBT REVIEW GUIDELINES
In 2014, the National Credit Regulator (“the NCR”) through the Credit Industry Forum (CIF) initiated a process to develop processes/guidelines on how debt counsellors and credit providers can facilitate inclusion of the monthly premiums of insurance related products for consumers under debt review. The aim of this process is to ensure that some of these insurance covers are not cancelled by consumers when under debt review as they offer protection in times of need. Following an intensive review process with industry stakeholders, the NCR is pleased to announce that the proposed paper has been signed off and is now issued as guidelines to be applied by all industry participants with immediate effect.
COMPLIANCE WITH THE GUIDELINES
Credit Providers and Debt Counsellors are requested to comply by applying these guidelines on all relevant debt review matters.
IMPLEMENTATION
These guidelines are effective as at the date of issue.
Credit providers can only cancel credit insurance policies if the consumer provides written and signed instruction. The cancellation of a credit insurance policy may be a breach of the relevant credit agreement, which could result in the credit provider cancelling such agreement and instituting the appropriate enforcement action.
If a consumer does not make payment of the credit insurance policy premium, such policy may lapse and the consumer may be in breach of the credit agreement, which could lead to the termination of that specific credit agreement from the debt review process and institution of enforcement action.
Following an investigation by the National Credit Regulator (NCR), Finbond Mutual Bank has been accused of charging its clients “unreasonable” amounts for its credit life insurance product. This was disclosed by Lesiba Mashapa, company secretary at the NCR who also levelled the same accusation at Guardrisk, Finbond’s cell-captive insurer. Mashapa said, from the results of the investigation, that Finbond charges R128 insurance premiums for a R700 loan, to be repaid in three months. This is in stark contrast to the R10 (per R1, 000) industry average for loans ranging up to R1, 000.
Cap cost of [Credit Life Insurance], says Treasury
July 6 2014
Currently, the National Credit Act (NCA) permits credit providers to insist that consumers take out insurance. The report also suggests that if credit providers are allowed to continue to compel consumers to take out insurance as a condition of a loan, the cost of this insurance should be regulated. Treasury and the FSB suggest that premiums be regulated by introducing recommended rates for different types of credit insurance and requiring insurers to justify charging above these rates. Personal Finance reported last year that the National Credit Regulator (NCR) was of the view that credit insurance should not cost more than R4 in premiums for every R1, 000 in cover.
The average Credit Life premium varies between [R6 to R10] per R1, 000 debt.
Our associates' credit life premium starts at only [R4] per R1, 000 debt.
The MAJORITY of our consumers/clients SAVE HUNDREDS of Rands every month!
YOU can ALSO SAVE money every month - so too can your FRIENDS, FAMILY and COLLEAGUES.
We can SAVE our clients even more money every month through group Short-Term Insurance for cars and household contents.
We can also provide our clients with Life Insurance Products, as well as Health Insurance and Group Schemes (through our associates).
It includes all debt:
* bond
* car
* loan(s)
* overdraft
* credit card(s)
* furniture and clothing accounts, etc.
Consumers will be required to pay a monthly credit life premium for debt at each respective Credit Provider - often escalating to hundreds of Rand's every month.
Credit Life Insurance is generally a mandatory (extra) charged to debt, enabling lenders to recover money owed to them by borrowers, if the borrower dies before repaying the full loan.
IMPORTANT INFORMATION from the NCR (National Credit Regulator)
NCR CIRCULAR 08 0F 2015 – INSURANCE PROCESS UNDER DEBT REVIEW GUIDELINES
In 2014, the National Credit Regulator (“the NCR”) through the Credit Industry Forum (CIF) initiated a process to develop processes/guidelines on how debt counsellors and credit providers can facilitate inclusion of the monthly premiums of insurance related products for consumers under debt review. The aim of this process is to ensure that some of these insurance covers are not cancelled by consumers when under debt review as they offer protection in times of need. Following an intensive review process with industry stakeholders, the NCR is pleased to announce that the proposed paper has been signed off and is now issued as guidelines to be applied by all industry participants with immediate effect.
COMPLIANCE WITH THE GUIDELINES
Credit Providers and Debt Counsellors are requested to comply by applying these guidelines on all relevant debt review matters.
IMPLEMENTATION
These guidelines are effective as at the date of issue.
Credit providers can only cancel credit insurance policies if the consumer provides written and signed instruction. The cancellation of a credit insurance policy may be a breach of the relevant credit agreement, which could result in the credit provider cancelling such agreement and instituting the appropriate enforcement action.
If a consumer does not make payment of the credit insurance policy premium, such policy may lapse and the consumer may be in breach of the credit agreement, which could lead to the termination of that specific credit agreement from the debt review process and institution of enforcement action.
Following an investigation by the National Credit Regulator (NCR), Finbond Mutual Bank has been accused of charging its clients “unreasonable” amounts for its credit life insurance product. This was disclosed by Lesiba Mashapa, company secretary at the NCR who also levelled the same accusation at Guardrisk, Finbond’s cell-captive insurer. Mashapa said, from the results of the investigation, that Finbond charges R128 insurance premiums for a R700 loan, to be repaid in three months. This is in stark contrast to the R10 (per R1, 000) industry average for loans ranging up to R1, 000.
Cap cost of [Credit Life Insurance], says Treasury
July 6 2014
Currently, the National Credit Act (NCA) permits credit providers to insist that consumers take out insurance. The report also suggests that if credit providers are allowed to continue to compel consumers to take out insurance as a condition of a loan, the cost of this insurance should be regulated. Treasury and the FSB suggest that premiums be regulated by introducing recommended rates for different types of credit insurance and requiring insurers to justify charging above these rates. Personal Finance reported last year that the National Credit Regulator (NCR) was of the view that credit insurance should not cost more than R4 in premiums for every R1, 000 in cover.
The average Credit Life premium varies between [R6 to R10] per R1, 000 debt.
Our associates' credit life premium starts at only [R4] per R1, 000 debt.
The MAJORITY of our consumers/clients SAVE HUNDREDS of Rands every month!
YOU can ALSO SAVE money every month - so too can your FRIENDS, FAMILY and COLLEAGUES.
We can SAVE our clients even more money every month through group Short-Term Insurance for cars and household contents.
We can also provide our clients with Life Insurance Products, as well as Health Insurance and Group Schemes (through our associates).
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Recent News
Our Credit Life product was established to address a growing demand of covering consumers’ debt in the event of death, disability and retrenchment – and in doing so PREVENT placing a BURDEN on families to repay their loved ones’ debt, should any of these events happen. It remains the WISE thing to do!
BENEFITS of Credit Life Insurance:
BENEFITS of Credit Life Insurance:
- Lower Credit Life Insurance Premiums (R4 per R1, 000 debt – in comparison with industry average of between R6 - R10 per R1, 000 debt).
- Comprehensive Cover (Death, Temporary + Permanent Disability, Critical Illness, as well as Involuntary Retrenchment and Short Pay benefit (for African Bank clients).
- Option to include Extra Benefits
- Up to 10 sessions per policy (thus replacing all Credit Providers’ cover under only ONE policy).
- Client can continue with policy after debt has been repaid – as a life policy with nominated beneficiary and added benefits.
- Web-based program for easy and convenient capturing and issuing of policy.
- NO waiting periods.
- NO policy or admin fees.
- NO underwriting (medical checks or questionnaires).
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DC’s often have the UNPLEASANT task to inform a deceased consumer’s spouse, children or family members that no provision was made for Debt Cover, or that Debt Cover lapsed when the consumer applied for debt review, and as a result thereof, the outstanding debt will become part of the estate of the deceased.
NO spouse, children or family member should have to deal with such TRAUMA.
It is and REMAINS the WISE decision of the consumer to ensure that Credit Insurance on ALL outstanding debt is in place, and it remains the RESPONSIBILITY of a DC to ADVISE the consumer accordingly. Non-conformance to this guideline, as supported by the NCR, can lead to possible legal action taken by the deceased consumer’s family against the DC for neglecting to advise the consumer properly.
NO spouse, children or family member should have to deal with such TRAUMA.
It is and REMAINS the WISE decision of the consumer to ensure that Credit Insurance on ALL outstanding debt is in place, and it remains the RESPONSIBILITY of a DC to ADVISE the consumer accordingly. Non-conformance to this guideline, as supported by the NCR, can lead to possible legal action taken by the deceased consumer’s family against the DC for neglecting to advise the consumer properly.
