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Why credit life insurance is a good money choice
This cover can protect your family assets by taking care of your debt if disaster strikes.
If you’re a breadwinner, knowing your family is provided for if anything should happen to you is important for your peace of mind. Incidents that can affect your livelihood, like unforeseen injuries or retrenchment, could fill your life with uncertainty.
Credit life insurance is designed to remove that worry. It gives you the security of knowing your debts will still be paid if your family no longer has the support of your income. Even if the worst should happen and you pass away, they will not be at risk of having to sell off assets like your home or your car to pay off financing contracts.
What is credit life insurance?
Credit life insurance is a policy that covers specific debts after an event that ends your ability to earn an income. Depending on the type of credit life policy you take out, cover could include one, some, or any of these events:
- your death,
- temporary or permanent disability due to illness or injury,
- diagnosis with a terminal illness, or
- retrenchment.
It’s designed to protect both the credit provider and your family. If you pass away, debt in your name will not pass on to your spouse or family (unless the debt is co-signed for, or you are married in community of property). The credit provider has assurance that the loan will be repaid when there is a valid claim. This is why credit providers often insist on a credit life insurance policy while the credit agreement is in place.
How does credit life insurance work?
1. The policy pays out to the credit provider, provided that your premiums are up to date on the date of the claim event.
2. The policy can pay off only specific debt.
3. The pay-out decreases as the outstanding repayment amount of the debt decreases.
4. The pay-out will be the outstanding repayment of the debt less any arrears and interest incurred.
Nedbank Insurance offers competitive credit life insurance for the following types of credit
1. Vehicle finance
Name of policy |
When it pays out |
What we cover |
|---|---|---|
When you pass away. |
We will pay out a lump sum equal to the insured outstanding balance on the vehicle loan account. |
|
When you pass away. |
We will pay out a lump sum equal to the insured outstanding balance on the vehicle loan account. |
|
When you get retrenched or experience loss of income. |
We will pay out up to a maximum of 6 months’ vehicle instalments per claim. |
|
When you pass away. |
We will pay out a lump sum equal to the insured outstanding balance on the vehicle loan account. |
|
When you get retrenched or become temporarily disabled. |
We will pay the monthly instalment for the period that the policyholder is unable to work due to a medical condition.
If you are retrenched, we will pay for a maximum of 6 months per claim. |
|
When you are permanently disabled or diagnosed with a critical illness as defined in our terms and conditions. |
We will pay a lump sum equal to the insured outstanding balance on the vehicle loan account (less any arrears). |
2. Home loan
Name of policy |
When it pays out |
What we cover |
|---|---|---|
When you pass away. |
We will pay the full cover amount. |
|
When you become temporarily or permanently disabled. |
Provided that you have chosen the disability benefit, we will pay the monthly cover amount under the instalment protector benefit. After we have paid 24 monthly instalments, we will continue to pay the monthly cover amount of the instalment protector benefit for as long as you do not have any other occupation for profit or reward.
We may, at our sole discretion, settle the home loan account by paying an outstanding balance if, in our opinion, you are regarded as totally and permanently disabled. |
|
When you pass away or become permanently disabled. |
We will pay the full outstanding balance of the loan. |
3. Personal loan
Name of policy |
When it pays out |
What we cover |
|---|---|---|
When you pass away or become permanently disabled as described in our policy terms and conditions. |
We will pay out a lump sum equal to the outstanding balance, not exceeding the initial loan amount. |
|
When you become temporarily disabled or retrenched, or experience loss of income. |
We will pay up to a maximum of 12 monthly instalments on the loan per claim. |
4. Credit card
Name of policy |
When it pays out |
What we cover |
|---|---|---|
When you pass away. |
We will pay out a lump sum equal to the outstanding balance on the credit card account, not exceeding 100% of the cover amount. |
|
When you get retrenched. |
We will pay 10% of the highest outstanding balance of the previous month for a period of 6 months (up to a maximum of R20,000 for the Balance Protection Plan). |
|
When you become temporarily disabled. |
We will pay up to a maximum of 6 monthly instalments (5 equal to 17.5% and 1 equal to 12.5%) not exceeding 100% of the outstanding balance in the statement month preceding the claim event. |
|
When you become permanently disabled. |
We will pay out a lump sum equal to the insured outstanding balance on the credit card account. |
|
When you are diagnosed with a critical illness as defined in our terms and conditions. |
We will pay a lump sum equal to the insured outstanding balance on the credit card account. |
5. Overdraft
Name of policy |
When it pays out |
What we cover |
|---|---|---|
When you pass away. |
We will pay out a lump sum equal to the overdraft limit (cover amount) on our Nedgroup Life system. |
|
When you get retrenched. |
We will pay 10% of the cover amount on our records and up to 10 payments per claim (up to a maximum of R30,000). |
|
When you become temporarily disabled. |
We will pay up to a maximum of 6 monthly instalments (5 equal to 17.5% and 1 equal to 12.5%) not exceeding 100% of the cover amount. |
|
When you become permanently disabled. |
We will pay out a lump sum equal to the cover amount. |
6. Student loan
Name of policy |
When it pays out |
What we cover |
|---|---|---|
When you pass away or become permanently disabled. |
We will pay the full outstanding balance of the loan. |
If you have any concerns or need clarification about credit life insurance, you can call us on 0860 333 111 or send an email to insurance@nedbank.co.za
