You may be paying for credit life cover – and you’re entitled to use it

When you signed your credit agreement, you may have also signed up for credit life cover. Since this forms part of the credit agreement itself, many people are unaware that they have this insurance.

If you are retrenched, become disabled, or pass away, credit life cover will kick in and settle your debt. But how do you know you have this cover, and how do you go about claiming it?

Tip: Consistently saving and investing can help you cover life's emergencies.

How does credit life cover work?

According to Tlalane Ntuli, co-founder and COO of Yalu SA, credit life cover protects both you and your loved ones from the strain of having to settle debt when your circumstances drastically change.  

“It’s important to note that the credit provider is the beneficiary, or receiver, of the payment. So, if you get retrenched and aren’t able to meet your monthly loan repayments, credit life cover will pay up to 12 months of your loan instalments to your credit provider while you look for employment,” says Ntuli.

She adds that in the case of death or permanent disability, credit life cover will settle the outstanding balance of your credit facility.

Find out whether you’re covered

Before you try to claim credit life cover, you need to make sure you actually have it included in your credit agreements. You shouldn’t wait until disaster strikes before you do this.

Ntuli recommends looking at your loan statement for a credit life cover premium line item because banks are required by law to stipulate this amount to you. Alternatively, she suggests asking your bank if they included credit life cover when they provided approval for your credit facility.

“The best bet is to ask your bank or creditor for your policy schedule, which includes your terms and conditions. For instance, most personal loan or student loan contracts in South Africa require credit life cover as a condition of getting the loan,” says Ntuli.

How can you claim credit life cover?

Ntuli explains that if you’ve served your required waiting periods, you can claim using the channel prescribed by your credit life cover provider.

“For example, with Yalu there are three channels you can use to submit your claim – through your online customer profile, by calling the service centre, or by sending an email,” says Ntuli.

To find out the most effective way to submit a claim, get in touch with your provider and ask them directly.

“Besides this, depending on the type of claim you have – retrenchment, death, or disability – different types of documents will be required from you or your family,” says Ntuli.

She points out that in the event of a retrenchment claim, typical documents you may need upfront include a Section 189 Letter of Retrenchment on a company letterhead with a valid company stamp, a certified copy of your ID, a certificate of service, and a stamped UI 19.

Tip: Your credit score is a core component of your financial health. Be sure to stay on top of yours.