NEWS ANALYSIS: What you need to know about the rip-off gap in credit life insurance rules
Borrowers should take care to read the fine print in their credit life insurance policies. Even with the recent introduction of caps to the cost of credit life, they could still find themselves being ripped off. New credit life insurance regulations effective from August provide credit providers with a loophole to continue exploiting consumers. A compulsory part of credit agreements, credit life insurance enables lenders to recover on loans in the event of a borrower’s death or permanent disability. Although credit providers do not always inform borrowers of this right, under the National Credit Act, consumers are allowed to obtain credit life insurance policies from any insurer. But with unsecured loans, it is overwhelmingly the credit provider that also provides the credit life insurance policy. Due to widespread overcharging by lenders on this type of cover, the National Credit Regulator introduced caps to the maximum monthly cost of credit life insurance on different types of cr...
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