The National Credit Regulator (NCR) has advised consumers to make use of their credit life insurance, to obtain some relief if they are unable to earn an income as a result of COVID-19.
“As South Africa is battling with the impact of COVID-19 on the economy, many consumers have been left with the inability to earn an income,” said the NCR, adding that some citizens were unemployed, while others are receiving lower income due to reduced working hours, according to a report by SAnews which is the South African government news agency.
Credit life cover is insurance that a consumer signs up for when applying for credit or a loan. It covers the outstanding debt in the event of unforeseen circumstances such as death, retrenchment, unemployment, inability to earn an income, disability and others.
President Cyril Ramaphosa announced a national 21-day lockdown to curb the spread of the COVID-19 pandemic, which came into effect on 26 March 2020.
NCR CEO Ms Nomsa Motshegare said some credit providers have pronounced interim debt relief measures for consumers, who have been hard hit by the pandemic.
The regulator advised that in the event of the consumer becoming unemployed or unable to earn an income, the credit life insurance cover provides that credit providers must settle/pay the consumer’s debt for a period of 12 months, or for the remaining repayment period or until the consumer finds employment or is able to earn an income - whichever period is shorter.
“Many consumers may not be aware that they have credit life insurance in place and that the premium for this insurance is already included in the cost of credit. To check if this insurance is in place, consumers must contact their credit providers and where applicable, consider use of this benefit to provide relief,” Ms Motshegare said.
The NCR was established under the National Credit Act of 2005 and is responsible for the regulation of the South African credit industry. The regulator is an agency of the Department of Trade and Industry.