What is credit life insurance?

One option that you could consider safeguarding against this financial concern is credit life insurance, which provides a measure of financial security that your loans or outstanding amount(s) will be paid so that your debts don't become a burden for you or your family during difficult times.

What is credit life insurance?

Credit life insurance is a type of insurance designed to help pay off your loans or cover your repayments if you're unable to do so due to specific life events, such as retrenchment and becoming sick or disabled and no longer able to earn an income and therefore afford to pay your loans/debt.

Unlike regular life insurance, which can be used for any purpose, credit life insurance is specifically tied to a loan. The payout goes directly to the lender to cover the outstanding debt.

5 Reasons to get credit life insurance

• Debt relief
  Credit life insurance pays off your outstanding loan balance, ensuring your family isn't burdened with debt during a difficult time.
• Financial security
  If you become temporarily or permanently disabled and can't work or become unemployed, credit life insurance can cover your loan payments or pay off the debt entirely.  
• Reduces stress
  Knowing that your debts are protected in case of unforeseen events can significantly reduce stress and anxiety, allowing you to focus on your health, wellbeing or employment without the added stress of finances.  
• Premiums decrease as balances decrease
  Your credit life insurance premiums typically decrease as you pay off your loan balance. This makes it a cost-effective solution that adapts to your changing financial situation. The premiums are calculated based on your outstanding balance, so as you reduce your debt, your premiums also go down.
• Fast payout (subject to policy terms)
  Credit life protection plans typically pay out as soon as the insured event takes place, subject to the terms and conditions of the policy. This means your family won't have to wait for other policies to settle your outstanding debts.

Types of credit life protection

Standard Bank Insurance Brokers offers a range of Credit Life Protection plans underwritten by Liberty Group, depending on the type of loan you want to cover.

Home loan protection

The home loan protection plan covers your property so you won’t have to worry about losing your family home if something happens to you. It provides the following:

• Covers the outstanding balance on your home loan up to R2 million in the event of death, dread disease or permanent disability
• Pays up to 12 months bond instalments if you’re temporarily disabled and unable to work due to an accident or illness
• Pays up to 6 months bond instalments if you are retrenched from your job

Premiums are calculated based on age, gender, income and smoking status, and your outstanding balance reduces in line with the reduction in your outstanding home loan amount.

If you have a joint bond and credit cover, the younger holder receives a 40% discount on premiums. There are also different plans to choose from to suit your circumstances and needs.

Credit card protection

The credit card protection plan gives you the reassurance that what you owe will be settled and your family won’t be left with the financial burden of credit card debt. It provides the following:

• Settles your outstanding balance up to a maximum of R250 000 in the event of death, dread disease or permanent disability
• Covers your monthly repayments for up to 12 months if retrenched  
• Covers your monthly repayments for up to 12 months following temporary disablement
• Includes a double accident pay-out in the event of accidental death
• Includes a minimum cover of R25 000

Premiums are calculated at a rate per R1 000 of your monthly outstanding balance and will be debited directly from your credit card. Free accidental death cover is automatically included for secondary cardholders.

Personal loan protection

A safety net for your personal loans, including student loans, overdraft or revolving credit plan, your personal loan protection plan provides the following:

• Pays off your loan up to a maximum of R300 000 in the event of death, dread disease or permanent disability
• Pays your loan instalments for a maximum of 12 months following temporary disablement  
• Covers your instalments for a maximum of 12 months if you’re retrenched 
• Includes a minimum cover of R20 000

Credit life insurance is mandatory on all new and limit increase revovling credit plans. Your premiums are calculated on the monthly rate per R1 000 of the outstanding balance of your loan, so as you pay it off, your premiums will decrease. If you have a joint policy, the younger life insured receives a 40% discount on premiums. There are different plans to choose from depending on your circumstances and needs.

Debt Protection

A safety net for your term loans, it’s also a mandatory policy that provides the following:

• Pays off your loan up to a maximum of R300 000 in the event of death and permanent disability
• Pays your loan instalments for a maximum of 12 months following temporary disablement
• Covers your instalments for a maximum of 12 months if you’re retrenched or inability to earn an income
• Includes a minimum cover of R20 000

Vehicle and asset finance protection plan

Keep the wheels rolling and avoid repossession with a plan that’s based on your circumstances and personal and professional needs that provides the following:  

• Settles the outstanding balance on your vehicle finance agreement up to a total of R1 million in the event of death, dread disease or permanent disability
• Pays your vehicle finance instalments for a maximum of 12 months following temporary disablement  
• Covers your instalments for a maximum of 6 months if you’re retrenched

Let us help you find the right insurance options for your needs today.

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_{Credit Life Insurance policies are underwritten by Liberty Group Limited. The Standard Bank of South Africa Limited is a juristic representative of Standard Bank Insurance Brokers an authorised FSP (FAIS no. 224). Terms and conditions, risks and limitations apply.}

_{Disclaimer: This article is solely intended for information. It does not constitute financial, tax or investment advice or recommendation. Please speak to a financial advisor or registered financial professional before making any financial decision(s).}

_{Standard Bank, its subsidiaries or holding company, or any subsidiary of the holding company and all of its subsidiaries make no warranties or representations (implied or otherwise) as to the accuracy, completeness or fitness for purpose of the information provided in this article or that it is free from errors or omissions.}