Credit Life Insurance on Your Loan: What It Covers, What It Costs and Whether You Can Cancel It
If you have a personal loan, vehicle finance or a home loan, you may be paying for credit life insurance without realising it. This is an insurance policy linked to a specific credit agreement, and it is designed to pay off or service your debt if something happens to your income or health. The National Credit Regulator has previously urged borrowers to ask about their credit life cover before taking a payment holiday, since a valid claim could help with repayments. The table below explains how it works, and you can compare the total cost of loans, including insurance, from NCR-registered lenders on saloansonline.co.za.
| Topic | What to Know |
|---|---|
| What it covers | Under the National Credit Act, cover can include death, disability, terminal illness and unemployment or other insurable risks that affect your ability to repay |
| Death or permanent disability | Your outstanding debt under the credit agreement is settled by the policy |
| Job loss (retrenchment) | The policy pays instalments for up to 12 months. People who are not employed cannot be sold retrenchment cover. |
| Cost limits | Capped at R4.50 per R1,000 owed per month for most credit agreements, and R2 per R1,000 for mortgages. On R50,000 owed, the cap works out to R225 a month. |
| Is it compulsory? | Not every loan requires it. Ask whether it is compulsory for your agreement, and if it was sold as an optional add-on you can cancel it. |
| Using your own cover | You may be able to replace the lender’s policy with a standalone one. Arrange the new cover first, and check cancellation terms, since it can take longer than 30 days. |
| If a claim is rejected | You can escalate it. Contact the NCR on 0860 627 627 or the FSCA on 0800 110 443. |
The cost limits come from regulations published in 2017, so confirm current limits with the NCR. Read your policy to see exactly what it covers, since cover and costs differ between lenders. This article is for information only and is not financial advice.
Sources
- Credit life insurance regulations published (SAnews)
- South Africans with credit and loans will soon be paying less (BusinessTech)
- Credit Life Insurance 101 (Maya on Money)
- Claim on your credit life cover instead of a payment holiday (HeraldLIVE)
- Credit life insurance in South Africa 2026 (Credizen)