Various financial institutions have implemented measures to provide relief to individual and business customers whose financial stability has been impacted by COVID-19. Several financial experts have also pointed in the media that, taking a ‘payment holiday’ during this difficult time may not be necessary, if you have credit life insurance cover.
Gerrit Viviers, our NCA Specialist, shares some insight on the matter:
The credit life regulations do make provision for minimum benefits that a consumer under a credit agreement subject to the National Credit Act, 34 of 2005 (“NCA”), is entitled to if he or she becomes unemployed or unable to earn an income, other than as a result of permanent or temporary disability. These benefits, as a minimum, should cover all the consumer’s obligations under the credit agreement that become due and payable for the shorter period of:
|ii)||the remaining repayment period of the credit agreement; or|
|iii)||until the consumer is employed or able to earn an income.|
In the lockdown period, there will undoubtedly be consumers that are either retrenched, required to take unpaid leave, earns a partial salary or if self-employed, is unable to earn an income at all.
We recommend that these consumers engage with their credit providers and consult the credit insurance policies that they entered into to establish whether or not they are covered in terms of the policy. We further recommend that the credit providers pro-actively engage with the insurers and/or intermediaries to assist the consumers to obtain the necessary information about their cover as well as to commence with the claim process, if applicable.
For any further information on this topic, please do not hesitate to contact Gerrit on email@example.com or 084 852 2003.
Click here to listen to The Money Show’s Bruce Whitfield asking personal finance journalist Maya Fischer-French about the pros and cons of dipping into credit insurance versus opting for a debt relief holiday.