The exclusions on credit life cover are governed by regulations under the National 
Credit Act.
This means that only certain exclusions from cover on death and permanent disability can be applied.
EXCLUSIONS ON CREDIT LIFE
Your credit life policy will not pay out if your death or disability arises from:
The abuse of alcohol or drugs;
An injury you wilfully inflicted on yourself or committed or attempted to commit suicide;
Active participation in a war or an operation like a war, a civil war or rebellion;
The use of nuclear, biological or chemical weapons, or any radioactive contamination;
Your participation in criminal activities;
Your participation in hazardous activities such as mountain climbing, bungee jumping and speed racing;
Any pre-existing condition you were aware of in the 12 months before your cover started.
Credit life cover is typically not underwritten, which means the insurer does not calculate your premiums based on your actual risk. When you come to claim, however, the insurer will check to see if your death or disability was a result of a pre-existing condition and if it was, cover for that condition will be excluded.
The regulations under the National Credit Act state that if you disclose a condition when you take out cover, that condition may only be excluded if the life insurer clearly informs you that it is a specific exclusion.
RETRENCHMENT EXCLUSIONS
The only exclusions from cover for retrenchment or an inability to earn an income are:
You resign.No waiting periods may be applied if your cover is for short-term credit with a term of one month or less.
| A FINANCIAL LIFE SAVER
In recent years, the slowing economy and Covid-19 pandemic have resulted in many people being retrenched, without an income or with a reduced income. Here are some scenarios to make it easier for you to understand when your credit life insurance has you covered. Scenario 1: You bought a new laptop in March with a repayment period of 24 months while you were still employed and earning a salary. You were retrenched two months later in Scenario 2: You bought a new laptop in January with a repayment period of 24 months with a view to starting your own business later in the year. However, you were retrenched four months later in May. The insurance cover must settle the amount payable for the shortest of the following three periods:
Scenario 3: You bought a new television set in March with a repayment period of six months
Scenario 4: You bought a new fridge in March with a repayment period of 12 months while you were still employed and earning a salary. Your salary was reduced by 40% in tough economic times. Unfortunately, you are not covered by your credit life insurance. Scenario 5: You bought a new laptop at the beginning of July with a repayment period of 24 months while you were still employed and earning a salary. However, you had been |
May as a result of the national lockdown in response to the Covid-19 pandemic. In terms of the National Credit Act regulations, your credit life policy does not have to cover you because of the exclusion which states that you are not covered if you are retrenched within the first three months of taking on debt with a term of six months or more.
while you were still employed and earning a salary. You were retrenched two months later in May. In terms of the National Credit Act regulations, your credit life cover must cover your debt for the shortest of the following two periods:
notified a month before, in June, that you would be retrenched effective from the end of July. In terms of the National Credit Act regulations, you are not covered because of the exclusion which states that you are not covered if you had been given notice that you would be retrenched before you bought the laptop on credit.