Credit life insurance from an independent provider can sometimes be significantly cheaper than a bank's default offering, because the borrower is free to shop around rather than automatically accepting the first policy presented. Over a 20-year bond term, the difference in premiums between providers can add up to a meaningful sum.
Source: National Credit Act 34 of 2005
Frequently Asked Questions
Is a home loan applicant legally required to take out the bank's own credit life policy?
No — the National Credit Act allows a borrower to source their own credit life insurance, provided it meets the bank's minimum cover requirements.
What does credit life insurance actually cover?
Typically, it settles the outstanding bond balance if the borrower dies, becomes permanently disabled, or in some policies is retrenched.
Is credit life insurance the same as home structure or contents insurance?
No — those are separate types of cover: credit life relates to the borrower's life and ability to pay, while structure and contents cover damage to the property and possessions.