Why you need credit life insurance
September 5, 2018
In life, there are many financial decisions you will need to make. You have to look for the perfect car to suit your needs. You must decide on a home loan that best suits your budget. And you must choose a credit card limit that you can actually afford to pay back. Another important decision you will need to make is whether or not you need credit life insurance.
Credit life insurance is a policy that will repay your debts in the event of your death. Or it pays out if you should be unable to work. It is a good idea to have if you have accounts that could accrue debt over the years. You can find credit life insurance quotes online to help make a decision on the best provider.
It provides protection for shared debts
The insurance also works iff you hold debt in common with someone, such as owning a house with your partner. In that case then having credit life insurance will cover your share of the debt. This will help your partner immensely in a difficult time without having to worry about debt.
Your spouse could lose a large portion of the property to creditors if you pass away, but will still have to pay for their share regardless. By having this type of life insurance, this is an avoidable situation. Shared debts can become insurmountable to the partner who has to pay them, making their grieving period difficult.
Cover for your entire credit debt
According to the National Credit Act (NCA), credit life insurance has to cover your entire debt. This means that your partner or family will not have to worry about re-paying anything. Your insurance will cover it.
Credit life insurance is ideal for those who have multiple loans in their name, such as vehicle finance for two cars or a bond for a home and a holiday house. The insurance company will pay off your entire debt. So creditors cannot repossess your assets once you die or become disabled. Your family can rest easy knowing that your assets will remain with the family so that they can continue life as normal.
No medical examination
Unlike normal life insurance, credit life insurance does not require you to have a medical exam. “Normal” life insurance is often highly reliant on a medical exam, as this will help your providers to ascertain how much life insurance you will receive upon your death or in the case of disability.
Credit life insurance does not require you to undergo a medical exam and you will be able to take out a policy easily without having one. Credit life insurance is used solely to repay debts, as opposed to life insurance which is used to pay for your family’s needs and essential expenses if you should die. This is why many credit life insurance quotes do not require a medical exam.
Your family will not have to dip into savings
If you are the sole breadwinner of your family, and you should pass away or become permanently disabled, your family might have to use your savings to repay your debts. This can be highly detrimental to their financial and emotional health.
Your credit life insurance will cover your entire debt, which means that your family will not have any financial strain hanging over them while they are stressed. Affordable life insurance in South Africa offers your family the ability to live their lives in peace without having to worry about repaying your debts using the money that has been saved for their futures.
Retrenchment is less stressful
Retrenchment can be a highly stressful time for anyone, especially if you are the sole breadwinner. However, having credit life insurance means that you can still repay your debts even if you are no longer working.
Your family will not have to worry about impending debt collection and creditors will not have to repossess any assets in order to recoup their money. Having a credit life insurance policy in place means that any debt you have, whether it is a home loan or a vehicle loan, will be repaid in full. This will allow you to spend time looking for new work or time with your family dealing with the difficult situation.
Life can be unexpected
One of the major reasons why credit life insurance is a good idea is because life can be unexpected. You never know what is around the corner, and this can be detrimental to your finances. It is inevitable that you will have some form of credit in your life. Rather than worry about how this will affect your family after you are gone, you should take action now to ensure that this does not become an issue.
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All info was correct at time of publishing