You've heard about credit life insurance. Your creditors have advised you to read the fine print on it before. Yet it remains murky waters to you because, well these thing tend to stay in murky waters until they are needed.
Credit life insurance has become the buzz word as COVID-19 takes root in people's lives.
Many will lose their income as time goes on while others might lose their businesses.
But what exactly is credit life insurance and how and when do I access it. Will it help me when I cannot pay my debts because of COVID-19.
Here are some frequently asked questions to assist you to know more about credit life insurance.
What is credit life insurance?
According to Lee Bromfield, CEO of FNB Life,
you can take out this form of insurance to be able to meet your debt
obligations in the event of disability, death, retrenchment or any other risk
that may prevent you from being able to repay your debt. This insurance covers any form of credit: credit cards, overdraft, student loans, vehicle loans and home loans.
Is credit life insurance compulsory?
Often credit life insurance is included when
calculating the cost of your loan. Many consumers have accepted these
costs with no questions asked. According to the National Credit Act (NCA),
credit providers can propose that you take out mandatory credit life insurance. However, you have the right to reject the policy offered in favour of a policy of your choice. The law also states that a credit provider may not demand that you purchase insurance that is unreasonable.
According to Bromfield, some products have compulsory credit life insurance for the smaller loan amounts. For instance, when you take out a personal loan, your provider may insist that you take out a credit life insurance. Some credit providers offer it for loans longer than six months. However, most credit products have voluntary products. Read more.
SOURCED FROM MONEY SHOP