The National Credit Regulator (NCR) has advised consumers to make use of their credit life insurance, which can provide some relief for those unable to earn an income as a result of COVID-19.
“As South Africa is battling with the impact of COVID-19 on the economy, many consumers have been left with the inability to earn an income,” said the NCR, adding that some citizens were unemployed, while others are receiving less income due to reduced working hours.
President Cyril Ramaphosa announced a national 21-day lockdown to curb the spread of the COVID-19 pandemic, which came into effect at midnight on 26 March 2020.
The NCR advises consumers that where applicable, they first consider the option of using their credit life insurance benefit as a relief in this difficult period.
Credit life insurance is an insurance that a consumer signs up for when applying for credit or a loan and it covers the outstanding debt in the event of unforeseen circumstances such as death, retrenchment, unemployment, inability to earn an income, disability and others.
Some credit providers have pronounced interim debt relief measures for consumers, who have been hard hit by the pandemic.
The regulator advised that in the event of the consumer becoming unemployed or unable to earn an income, the credit life insurance cover provides that credit providers must settle/pay the consumer’s debt for a period of 12 months, or for the remaining repayment period or until the consumer finds employment or is able to earn an income - whichever period is shorter.
Many consumers may not be aware that they have credit life insurance in place and that the premium for this insurance is already included in the cost of credit. To check if this insurance is in place, consumers must contact their credit providers and where applicable, consider the use of this benefit to provide relief.
The NCR was established as the regulator under the National Credit Act 34 of 2005 (NCA) and is responsible for the regulation of the South African credit industry.
