SA Corona Virus Online Portal Logo
CLICK HERE FOR MORE INFORMATION

Secondary

credit

Credit life insurance offers crucial festive season savings

The festive season has always been a time for excessive spending. In the wake of the damage caused to household incomes by the Covid-19 pandemic, and the need to break free from lockdown shackles, this year could be even worse.

No doubt, credit will be used when cash runs out. It might be worthwhile sharing some noteworthy news with your clients in this regard.

The Credit Life Insurance Regulations provide for two models according to which the maximum premium for credit life insurance payable can be calculated, namely:

1.) The “Straight line” method: the maximum premium is calculated on the “deferred amount excluding the cost of credit life insurance, at the inception of the loan”; or
2.) The “Reducing Balance” method: In other words, the maximum premium is calculated on the “deferred amount excluding the cost of credit life insurance, from time to time under the credit agreement.” Thus, the credit life insurance premium is linked to the outstanding credit amount and the repayment period.

We recently came across an interesting article which explains the “reducing balance” principles, which could help alleviate pressing cash flow problems which may stem from the conventional straight line approach, which caused much hardship as a result of unscrupulous practices in the past.

Click here to read Nkazi Sokhulu, CEO and co-founder of Yalu’s commentary on how restructuring CLI policies gives value to consumers.

Related article: COVID-19 – Credit Life benefits might cover obligations

Click here to read more about the National Credit Act services that Moonstone Compliance provide.

, ,

Comments are closed.