Final credit life insurance regulations were gazetted on 10 February 2017 and are scheduled to come into force in August this year. Only credit agreements concluded on or after the commencement date will be affected.
Legalbrief Today notes:
“…once in effect, the new regulations will impose mandatory obligations beyond covering the outstanding balance of a consumer’s ‘total obligations under the credit agreement’ on death or permanent disability – subject to certain exclusions and limits. They will also provide limited short-term cover in specific situations of temporary disability, unemployment or the inability to earn an income not related to permanent or temporary disability. Special provisions are made for policies issued to consumers who are pensioners, unemployed, self-employed or employed in the informal sector at the time.”
“…in determining the cost of credit life insurance, the provider will be required to take account of the actual risk and liabilities associated with the credit agreement, including the risk of the actual occurrence of events insured against. This will apply, regardless of whether such risk is informed by individual risk profile, or underwritten on a group basis.”
“Other issues addressed include: the cost of additional benefits; limits on annual charges; and policy substitution. Underpinned by a commitment to ensuring that every consumer is fully informed and regularly reminded of the exclusions and limitations applicable to a credit life insurance agreement, the regulations are to be implemented in accordance with the relevant guidelines.”