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The Covid-19 lockdown has placed unprecedented pressure on the economy. Many people have suffered partial or complete loss of income during the lockdown. In fact according to the latest research from TransUnion, eight in 10 South African adults from a survey of 2,001 respondents, say that their income has been negatively affected by the pandemic.
Many South Africans may now find themselves unable to keep up with their monthly debt instalments on their credit card, or personal loan payments.
Basani Maluleke, CEO at African Bank, says this is when your loan agreement, which includes Credit Life insurance, really comes into play. “We reminded our customers right at the beginning of lockdown that there was a lifeline.” She explains that all new personal loans taken out in South Africa since August 2017 are covered by extended Credit Life insurance. Credit life is an insurance cover that a consumer is compelled to take up when applying for a credit card or a loan. For employed people, it covers the monthly instalments up to 12 months, in the case of loss of income/retrenchment, short time and compulsory unpaid leave. It also provides cover for instalments up to 12 months in the case of temporary disability. In the case of permanent disability and death, the outstanding balance of the credit facility is settled.
Loan or credit card customers who qualify are encouraged to use their Credit Life insurance policy to cover their full monthly repayments on their loan for up to 12 months.
So, who qualifies to benefit from Credit Life?
- Credit card holders and personal loan customers will benefit, provided their instalments are up to date.
In terms of personal loan and credit card customers, you will be covered:
- If you have been retrenched;
- If your employer has reduced your salary by 20% or more, through short time or compulsory unpaid leave;
- Most banks insist that your credit repayments must be current and up to date for Credit Life cover to be active at the time of a Credit Life claim.
Maluleke says, “It is important to note that any credit card transactions made after the date of an insurable event are not covered and if a claim is granted, you will not be able to use your credit card facility during the period that your instalments are covered by insurance.”
What do you need to do?
Employed people who have been retrenched, put on short time or compulsory unpaid leave by their employers, need to ensure they have written communication from their employer to be able to claim Credit Life benefits. “We urge employers to act responsibly around this issue and provide employees with the necessary documentation,” says Maluleke.
For a valid Credit Life insurance claim, it is important to visit your bank’s website to see what documents are required for the claim. Maluleke says different documents are required for short time, compulsory unpaid leave and retrenchment. She says they all require your ID number and a letter from your employer, plus some additional documents.
“We assess each situation individually and confirm whether customers are eligible for benefits or not. All claims will be verified before a decision is granted and it is recommended that all claims are rather done online,” says Maluleke.
If you feel you qualify for Credit Life insurance, make sure you obtain a letter from your employer, then approach your bank as soon as possible to find out whether the benefits apply to you. “It is very important to contact your bank to explain your situation,” concludes Maluleke.
This post and content is sponsored, written and provided by African Bank.
