Debt and bills are a part of life. But in the unfortunate case of death, disability or retrenchment, the last thing you want to do is put that financial pressure on your loved ones or dip into those hard-earned savings to cover your obligations. Fortunately, having credit life insurance in place is one way of ensuring your debt will be covered should the unthinkable happen.
“Disability, retrenchment and death are three words we never thought we would have to face. However, over the past two years with the Covid-19 pandemic, we now realise that these harsh realities are closer to us than we may have realised,” says Elaine Markus, Head of Life Insurance Products at Standard Bank Insurance. “The financial consequences of such events can be severe, which is why it is critical to make necessary provisions that will shield you and your family from financial distress.”
Credit life insurance is a type of insurance that is designed to do just that. Markus explains that if you pass away, the insurance will cover the outstanding balance of your debt.
Whereas if you become disabled, contract a serious illness or get retrenched, it will help you to pay your debt for a specific period, or until such time you can resume payments on your own. This means that you would not have to dip into your life insurance or hard-earned savings to pay off the debt.
Do I need credit life insurance in addition to life insurance?
Having credit life insurance means that when you pass away, your family or selected beneficiaries will not have to dip into the life insurance pay out to cover your outstanding debt, as your family will still need to cover day-to-day expenses such as groceries, school fees and utilities, and to ensure that they can continue with the same quality of life.
What does credit life insurance cover?
Depending on the product you select, it is possible to get cover on home loans, credit cards, vehicle and asset financing, student loans and revolving personal loans. Markus advises customers to ensure that they understand the terms and conditions of a policy and the protection offered to avoid any unwanted surprises.
“There are different kinds of credit life insurance which will be uniquely applicable to each individual agreement. Understanding the policy terms will give you an idea of what specific benefits you are entitled to and the conditions associated with these benefits.”
Does credit life insurance cover only one person?
Markus explains: “Credit Life Insurance can cover more than one person. If you are married in community of property both you and your spouse are responsible for the debt and therefore both of you will need to be covered. The same applies for family members or friends who stand surety for your loan.”
Staying updated with your financial obligations as well as the options to service them will allow you to choose the correct products and cover the relevant people responsible for a particular debt. In the case of insuring both you and your spouse, you may be entitled to the added benefit of a discount on the coverage.