Long answer:
Credit life insurance is a policy that settles or services specific credit agreements if you die, become disabled, or are retrenched. In South Africa it’s regulated under the National Credit Act (NCA). Since 10 August 2017, the Credit Life Insurance Regulations introduced premium caps and clearer standards to protect consumers. Typical maximums include R4.50 per R1,000 of the deferred amount on credit facilities/unsecured loans and R2.00 per R1,000 on mortgages (for credit granted after the rules took effect).
What credit life insurance covers (and why lenders require it)
Most credit life policies cover one or more of the following trigger events:
Death – pays off the outstanding balance (or a defined benefit) on the covered credit agreement.
Permanent or temporary disability / dread disease – settles the debt or pays instalments for a defined period.
Retrenchment / loss of income – pays instalments for a limited period (e.g., up to 6–12 months, policy-dependent).
Lenders frequently require suitable cover as a condition of certain loans because it reduces default risk if your circumstances change. (This protects you and the credit provider.)
What changed with the 2017 Regulations (and why it matters)
To stop over-pricing and mis-selling, the Final Credit Life Insurance Regulations (published 9 Feb 2017; effective 10 Aug 2017) set maximum premiums and clarified what benefits are appropriate for different credit types. Highlights:
Premium caps (typical headline caps):
Unsecured credit / credit facilities (e.g., credit cards, personal loans): ≤ R4.50 per R1,000 of the deferred amount/average utilisation.
Mortgage agreements: ≤ R2.00 per R1,000 of the deferred amount.
Applies to new credit entered into on/after 10 Aug 2017.
The NCR issued an updated 2024 Guideline to help the market apply the rules consistently (useful when disputing pricing or cover).
If your loan started before the rules kicked in, the caps don’t automatically apply to that old policy—but you can still compare and switch to compliant cover on new credit or where allowed.
What credit life insurance does not do
It doesn’t fix affordability problems by itself—premiums still come from your budget.
It won’t pay if you don’t meet policy conditions (e.g., waiting periods, exclusions, or if the account is already in default when the event occurs). Read the schedule carefully and ask for a key facts summary.
Do you actually need it?
Ask yourself:
If I died or lost my income, would my family be stuck with this debt?
If yes, credit life can be a targeted safety net—especially for home loans and large personal loans.Do I already have sufficient life/disability cover elsewhere?
Some consumers are double-insured. Compare the lender’s policy with any existing cover (sum assured, waiting periods, exclusions).Is the premium fair and within the cap for this credit type?
If not, query the pricing using the 2017 Regulations and the NCR 2024 Guideline. SA News+1
How to compare policies in 10 minutes
Premium vs. cap: Check your policy cost against the R4.50/R2.00 per R1,000 benchmarks (depending on the credit type). If it’s higher on new credit, ask why.
Events covered: Confirm death, disability (temp/permanent), and retrenchment benefits—and the months covered for instalment protection.
Waiting periods & exclusions: Retrenchment often has a waiting period; some policies exclude voluntary resignation or certain job types.
Settlement vs. instalments: For each event, does it settle the balance or just pay instalments for a set time?
Account status clause: Many policies won’t pay if the account was in arrears/default before the event.
Credit life insurance & debt review: quick notes
If you’re under debt review, your policy may still protect the specific account when a covered event occurs—provided you meet the policy rules. Keep premiums up to date and notify the Debt Counsellor if you claim, as a payout can change your repayment plan. Credit life insurance will generally cover your debt review instalments for 12 months. Once your claim is approved, your credit providers will receive their monthly debt repayments directly from your insurer. This gives you time to find a new job or other source of income.
If you complete debt review and receive Form 19, the “under debt review” flag is removed by the bureaux after your counsellor notifies them—this is separate from any past credit life claim. (Good to clarify with clients who conflate the two processes.)
When to claim—and how to avoid declined claims
Act fast: Notify the insurer as soon as a qualifying event happens (death, disability, retrenchment).
Gather documents: ID, loan agreement, policy schedule, medical reports or retrenchment letter, bank statements, death certificate where relevant.
Keep the account status clean: If you anticipate missing an instalment, inform the insurer/counsellor promptly—some policies decline claims for arrears/default at the event date.
Escalate properly: If a claim is rejected and you believe it’s unfair or outside the rules, use the insurer’s complaints process and reference the NCR Guideline for interpretation where relevant.
Is It Compulsory?
Some credit providers always require credit life insurance, e.g. African Bank and Capitec. Other providers might not require you to have credit life insurance. It's important to note that you don't have to use the credit life insurance product provided by your credit provider. For example, if you're taking out an African Bank loan, you don't need to use African Bank's credit life insurance. You can use any credit life product, as long as it adequately covers your loan, to your credit provider's (e.g. African Bank's) satisfaction.
Action checklist (do this today)
Pull your loan agreements and policy schedules.
Confirm the premium and compare it to the regulatory cap for your credit type.
Note what’s covered, waiting periods, and claim documents required.
If anything’s unclear or looks out of line, quote the 2017 Regulations and the 2024 NCR Guideline when you ask your lender/insurer for clarification.
Early in Debt Sage's debt review process, our experts will assess whether you have adequate credit life insurance and check that you are not over-insured, wasting money.
Conclusion
Want us to sanity-check your policy? Send your loan type, balance, premium and policy summary. We’ll verify if pricing sits within the cap, flag exclusions that matter, and suggest cheaper or better-fit options, without compromising required cover.