The exclusions on credit life cover are governed by regulations under the National Credit Act.
| A FINANCIAL LIFE SAVER
In recent years, the slowing economy and Covid-19 pandemic have resulted in many people being retrenched, without an income or with a reduced income. Here are some scenarios to make it easier for you to understand when your credit life insurance has you covered. Scenario 1: You bought a new laptop in March with a repayment period of 24 months while you were still employed and earning a salary. You were retrenched two months later in May as a result of the national lockdown in response to the Covid-19 pandemic. In terms of the National Credit Act regulations, your credit life policy does not have to cover you because of the exclusion which states that you are not covered if you are retrenched within the first three months of taking on debt with a term of six months or more. Scenario 2: You bought a new laptop in January with a repayment period of 24 months with a view to starting your own business later in the year. However, you were retrenched four months later in May. The insurance cover must settle the amount payable for the shortest of the following three periods:
Scenario 3: You bought a new television set in March with a repayment period of six months while you were still employed and earning a salary. You were retrenched two months later in May. In terms of the National Credit Act regulations, your credit life cover must cover your debt for the shortest of the following two periods:
Scenario 4: You bought a new fridge in March with a repayment period of 12 months while you were still employed and earning a salary. Your salary was reduced by 40% in tough economic times. Unfortunately, you are not covered by your credit life insurance. Scenario 5: You bought a new laptop at the beginning of July with a repayment period of 24 months while you were still employed and earning a salary. However, you had been notified a month before, in June, that you would be retrenched effective from the end of July. In terms of the National Credit Act regulations, you are not covered because of the exclusion which states that you are not covered if you had been given notice that you would be retrenched before you bought the laptop on credit. |
This means the only exclusions from cover for death and permanent disability are if your death or disability arises from:
The regulations under the National Credit Act state that if you disclose a condition when you take out cover, that condition may only be excluded if the life insurer clearly informs you that it is a specific exclusion.
The only exclusions from cover for retrenchment or an inability to earn an income are:
No waiting periods may be applied if your cover is for short-term credit with a term of one month or less.
