What is credit life insurance?
Credit life insurance is the most popular of long-term insurances, as it ensures that your debts will be paid off in the event of your death (and, depending on your plan, if you become disabled or are retrenched).
Credit life insurance or “customer protection insurance” is defined in the National Credit Act as the cover payable in the event of a consumer’s death, disability, terminal illness, unemployment, or other insurable risk that is likely to prevent the consumer from earning an income or meeting the obligations under a credit agreement.
Is it legal to switch cover?
Yes, absolutely. For more information, read our blog; "Is switching credit life insurance cover legal?"
Am I going to be paying for this service?
No, the service is 100% free. You will continue to pay for credit life insurance, however, your monthly premium should be at a cheaper rate than what your credit provider charges, and the insurance premium payment will be made to Switch2 via debit order.
Will this be an additional debit order?
Your previous credit life insurance would most likely have been included in your instalment payment to your credit provider, but by providing independent insurance through Switch2 for all your credit products, there will be an additional debit order paid to Switch2.
How will I see my savings?
Once we’ve switched your credit life insurance to Switch2 cover, your monthly instalment to the credit provider will decrease, as the insurance portion will no longer be paid directly to them. Instead, your more affordable premium will be paid to Switch2, in line with the savings estimate provided.
Is this a new policy?
How does the process work?
- Step 1: Take an agent’s call and get ready to save
Step 2: Give the trusted agent your ID number to trace your current cover, and confirm that they may access your details
Step 3: The agent will instantly be able to describe your saving potential!
Step 4: Decide if saving is what you want to do
Step 5: Accept, and save
- Step 1: Click on “Start Saving Today – Here’s How” and Enter your details and click “Get Started”
Step 2: Enter your ID number (which is kept 100% confidential) and click “Accept”
Step 3: Instantly see your saving potential! Click “Yes Investigate” to continue (this creates no obligation to switch just yet)
Step 4: Answer a few quick questions and click “Next Read Terms and Conditions”
Step 5: Read some important information, and click “I Accept – Switch Me!”
What is happening in the background while I enter my details and follow the steps?
- With your permission, we review your credit profile and use it to estimate how much we could be saving you on your credit life insurance monthly.
If you are satisfied with the savings, you provide us with a Client Authority Mandate verbally over the phone. This allows us to interact with your credit providers on your behalf.
We contact each of the respective credit providers with whom you have an account, cancel the existing credit life insurance and switch the insurance cover.
The policy is ceded to the respective credit provider and is paid directly to them, in an insured event (death, disability or retrenchment).
We handle most of the paperwork, making it a painless switch.
How do you know I have credit life insurance in place?
Your current lenders confirm with us whether you are paying for credit life insurance. In most cases, credit life insurance is mandatory – we’ll know when you have (or need) cover. For more information, read out blog; "Which loans usually include credit life insurance"
What does your company get for helping me?
As an authorised financial services provider, we earn a 20% binder fee for intermediating between yourself and the insurer, Clientèle Life Assurance Company Limited. This is included in the premiums we quote you.
Is there a waiting period?
Only if you are currently in a waiting period with one of your lenders.
What are the benefits?
Cheaper credit life insurance, for benefits more suited to your needs of saving money on your credit life insurance premiums. By switching you can save an average of R7 000.00 a year.
Are there any benefits in addition to credit life insurance such as, for example, maternity benefits?
If your current cover includes additional benefits, these will be transferred to your new cover.
If I have no pre-existing medical conditions when joining Switch2, and after a month I am diagnosed with a condition, would I still be covered?
What are Switch2’s credentials?
Switch2, a Division of Clientèle Life Assurance Company Limited, an authorised Financial Services Provider and registered insurer (FSP Number 15268)
What’s the catch?
There really isn’t one.
Does this affect my credit score or affect my accounts in any negative way?
No, it definitely won’t. Our call to the credit bureau will leave a footprint, which will confirm that this was merely to check your current records, and that no new loan application is being made.
How do you calculate my debit order?
We take your current outstanding balance on a quarterly basis per lender – where we can save you – and calculate the new credit life insurance premium you will be paying. The premium will change monthly, as a result of loans being paid off, or new loans being taken.
Will my debit order decrease as my balances reduce and how would you know when to stop the debit order?
Yes, they will, the premiums decrease on a sliding scale, as the loan amount decreases. We monitor the status of the loans on a quarterly basis, and these checks will confirm if the loan is settled, and we’ll stop the debit order.
Will I receive statements on a monthly basis?
You will receive a monthly newsletter, which will indicate the amount of money you have saved to date by switching.
Is there a breakdown of how much I will be paying for each account, showing when I pay less?
Certainly. Any and all information pertaining to your premiums is available on request from the Switch2 team.
What happens to the instalments that we already paid on credit life insurance?
The lender will stop charging them to your account and Switch2’s debit order will start (at the lower rate). The benefits and cover remains exactly the same. Unfortunately, we cannot reclaim any amounts you were being charged previously.
Why do I need credit life insurance?
A credit provider is entitled to require a consumer to maintain credit life insurance during the time of the agreement so that the loan will be paid if the creditor passes away, becomes disabled, is retrenched, or becomes unable to pay the debt. It is designed to protect and provide a measure of security for both the insured and the credit provider.
Do I need to take out credit life insurance with the credit provider giving me credit?
No. The NCA confirms that, while the credit provider may offer you this insurance, you have the right to obtain cover anywhere. If you’ve already taken cover with the credit provider and want to switch, the only requirements are that the new cover must offer the same or better benefits as the existing cover, and there can be no gap in cover (there can be no period of time where no credit life insurance is in place).
Do I qualify for a customer protection insurance policy (credit life insurance) with Switch2?
You qualify for a policy if you:
Have a balance outstanding on a loan agreement with a credit provider;
Are not about to be retrenched; and
Are economically active and able to demonstrate an income.
Once I switch, what protection will the policy offer?
The customer protection insurance policy protects you in the case of an “insured event” taking place during your period of insurance. This includes, as a minimum, the following benefits:
- In the event of your death, permanent disability or diagnosis of a critical illness, the policy will pay a lump sum directly to the credit provider, equal to the value of the outstanding debt in terms of a credit agreement.
In the event of you suffering a loss of income through temporary disability, retrenchment or any other cause through no fault of your own, the policy will cover the full monthly instalment for a period of up to six months.
If you are self-employed and suffer a loss of income through temporary disability, the policy covers the full monthly instalment for a period of up to 12 months.
What is excluded from the customer protection insurance policy?
- Retrenchment benefits are not paid if you lose your income within 90 days of the commencement of the insurance cover.
Suicide is not covered if it occurs within a period of 24 months of the commencement of the insurance cover.
Pre-existing conditions are not covered if these conditions result in a claim within 12 months from the commencement of the insurance cover.
How are claims paid out?
The customer protection insurance policy is ceded to the credit provider. This means that, in the event of a claim, the sum insured will be paid to the credit provider directly to settle the outstanding balance on the loan.