Credit Protection explained…
Why you need Credit protection cover when buying a vehicle on finance, whilst having life insurance.
For most South Africans, in this economic climate, credit is a way of life. The challenge comes when the unforeseen happens and you aren’t able to make the repayments to the financial institution. Will your spouse or family be able to keep up with the monthly vehicle instalments?
If you are retrenched, suffer a dread disease, become disabled or even worse, die, will there be money to pay for your vehicle?
If these unforeseen life events happen, a Credit protection plan protects you and your family and helps you and/or them to meet the required financial obligations.
This is not similar to ordinary life insurance as these protection plan benefits go directly to paying off the specific outstanding financial obligations of your vehicle finance. Leaving the asset (vehicle) to your family. These pay-outs are usually quicker than with normal life insurance policies.
Life insurance policies normally form part of the estate and will only be paid once the estate is finalised, by which time the vehicle may already have been repossessed.
No matter how well you have planned, debt has the potential to cripple your loved ones. By taking this kind of cover, this policy can make sure that your family is well looked after.
What makes this protection worth the while?
1) It is easy as it can be taken with your finance agreement of per debit order payment
2) It is convenient – no extra medical examinations to be done – only a health declaration to complete.
3) It is available to anyone between the ages of 18 to 60.
These policies pay the loan in full when:
a) You suffer a dread disease
b) You get permanently disabled
c) You die unexpectedly
These policies pay your installments for a certain period:
a) If you get retrenched
b) You suffer temporary disability which causes a loss of income