It is important for South Africans to know what they are covered for to be able to make an informed financial decision, especially in light of COVID-19.
South Africa (1 April 2020) – As consumers continue to weigh the impact of COVID-19 on their finances, many will be considering options to protect themselves from financial difficulties.
Earlier this week, South African banks announced many new options and cashflow relief measures for customers whose finances have been impacted by COVID-19.
A video then started trending on social media of a South African talking about alternative options that banks had not mentioned.
FNB sent out a statement explaining that one option – Credit life – is actually a great idea to provide relief to customers impacted by COVID-19
The Bank acknowledges and agrees with personal finance commentators that credit insurance has always provided relief to customers who qualify and should be one of the options that customers consider over the next few months. It is with this in mind that FNB further confirms that, as per the announcement made earlier this week, the new COVID-19-related digital application process assists customers to process credit insurance when applicable, before finalising additional cashflow relief measures with each customer.
Lee Bromfield, CEO of FNB Life says, “Credit Life has been around for a long time, and we went live with cover on loss of income on our products in August 2017. Since then, it has always been one of our primary considerations for customers who are in financial difficulty.”
According to the National Credit Act, credit life insurance is payable in the event of death, disability, terminal illness, unemployment or other insurable risks that are likely to impair the consumer’s ability to earn an income or meet the obligations under a credit agreement.
If a customer is permanently employed and they become unemployed or are unable to earn an income due to contracting COVID-19 or due to measures put in place to prevent the spread of the virus, all their obligations under the Credit Agreement that become due and payable can be paid either for 12 months during the remaining repayment period of the Credit Agreement, or until they are able to find employment or earn an income whichever is the shorter period.
“It’s important for customers to know what they are covered for to be able to make informed financial decisions, especially in light of COVID-19. We will be issuing direct communication to customers who have credit life insurance with the bank on their credit products. We are firmly committed to supporting our customers during this difficult time,” says Bromfield.
FNB encourages its customers whose income has been affected by COVID19 to apply for relief on its banking App via the COVID-19 icon.
Examples of Credit Life pay-out scenarios (according to FNB):