Why credit life insurance is important

Life is full of uncertainties. Which is why when the worst happens, it is important that your family is able to continue their lives without having to worry about repaying your debt. If you are unable to, this is where credit life insurance should factor into your decision making about what policies to take.

What is credit life insurance?

The credit life insurance definition is simple: in the case of the permanent disability, involuntary retrenchment or natural and accidental death of the main policy holder’s death, African Unity Life’s credit benefit will settle the outstanding credit or loan amount with the finance provider.

The financial burden will not fall on your family if you have credit life insurance, because with AUL the primary member is covered in the case of permanent disability or retrenchment. In the event of death, this long-term life insurance ensures that those left behind will not suffer any further financial burdens. The types of debt covered by AUL’s credit life insurance include personal loans, purchases on credit and overdraft accounts.

How do I apply?

Applying for credit life insurance is a simple process, and one important aspect to note is that you will not have to undergo a medical examination for credit life insurance.

• Apply for a quote online using the form available, and wait for a consultant to contact you regarding your application.
• Gather your documents including a South African Identity Document, a recent payslip or three months of bank statements and proof of residence. You will need these documents once you have been contacted in order to complete the application.

You will be able to choose from packages that best suit your needs, but be sure to always read the fine print before signing anything.

Why is credit life insurance important?

Having credit life insurance will ensure that if you are injured to the point of being unable to work, retrenched or if you pass away, your family will not be burdened with having to pay your debts.

Your family will not be burdened: It is true that your debt for a car loan or personal loan will not become the responsibility of your family but if you have taken out a loan with a partner (a bond with your spouse) then you should be thinking of settling the debt after you die. Your spouse could lose a large amount of the estate to creditors after you die, should this debt not be settled.

Retrenchment is less stressful: Becoming involuntarily retrenched can be a highly stressful time, especially if you are the principal breadwinner. However, taking out credit life insurance will lessen some of this stress significantly. You will be able to repay your debt even if you are not working. This will make dealing with your retrenchment a much less stressful time for both you and your family.

You will not have to use emergency savings or retirement funds: Should the worst happen and you were to pass away, having credit life insurance from AUL means that your family will not have to delve into the emergency savings or retirement fund to repay your outstanding debt. Having to do this would damage the financial future of your family, but if you have the correct policies in place, this will not be an issue.

You will have peace of mind: If for some reason, you are unable to obtain normal life insurance, credit life insurance can be equally as beneficial. You will not have to undergo a medical exam, which could be one of the reasons you are not being granted life insurance. If you are concerned about how you will be able to repay your debts should you become disabled or lose your job, credit life insurance will give you the peace of mind you are looking for.

Most credit life insurance does not charge interest on your premium: The NCA (National Credit Act) does not allow the insurance premiums to be added to your debt and interest to be calculated on the total. Credit life insurance can be paid monthly or annually but cannot attract interest. This is a positive in that you will not be paying an exorbitant amount on top of your other debt.

It covers a variety of debt: This form of life insurance is not limited to  one type of debt, but rather covers a variety of forms of debt. You will be able to repay your personal loans, credit card debt, overdraft accounts and even bonds. The fact that different types of debt are covered by AUL’s credit life insurance means that you and your family can pay back whatever outstanding debt you may have.

Conclusion

Having credit life insurance will act as a buffer for your family should you be unable to repay your debts if you become disabled, retrenched or pass away. It will alleviate the financial burden on them while they are dealing with the stress of such a tragedy and will allow them to deal with their emotions rather than with creditors. Apply for a quote online with African Unity Life now to take a step in the right direction to protecting your family.