What is Consumer Credit Insurance?

When a consumer buys something on credit, they will normally be required to buy insurance that will cover their debt if:

• The goods that they buy accidentally get lost, stolen or damaged.
• They die
• They are disabled, with certain conditions
• They are retrenched at their workplace.

Different rules apply to each of the four types of insurance cover mentioned above.

1.Loss or damage of goods purchased on credit

A consumer can buy insurance cover to provide for the loss or damage of goods purchased on credit:

• Insurance that will cover the outstanding debt only; or
• Insurance that will cover the outstanding debt, and also the cost of replacement or repair of the lost, stolen or damaged goods or item.

2.Death

This benefit covers the outstanding debt owed by the consumer on the goods purchased on credit, in the event of their death.

3.Disability

This benefit covers the outstanding debt if:

• The consumer becomes totally disabled on a temporary basis and is unable to work for a stipulated period of time. This cover will usually pay their monthly installments for a limited period of time; or,
• The consumer becomes permanently disabled so that they are unable to perform their usual work. This is the same as the death cover, and the outstanding debt will be paid in full.

4.Retrenchment

This benefit covers the consumer when they become unemployed due to retrenchment. Should this happen, the following may apply:

• The consumers monthly installments will be paid for a stipulated period of time; or
• The consumers’ outstanding debt will be paid.

Consumers must note that there will be a waiting period before they are covered, usually 12 months and should take note of that and the following instances under which they will usually not be covered:

• When they lose their job as a result of any illegal action, for example fraud, theft, strike, etc.
• When they resign.
• When they are dismissed fairly.