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When you don’t have a ton of different debts

So when does credit life cover make sense? Think of someone who’s just starting out in life and their only debt is the finance amount on a brand new refrigerator. This person doesn’t have dependants, and quite frankly, if they were to pass away, the furniture shop can come and collect the fridge for all they care.

But hey, if they insist on life insurance, why argue? Just sign the blinking credit life agreement and get on with your life.

When your debt is small in the grand scheme of things

Why not ask yourself: “Should I finance the purchase on a credit card?” Credit cards come with credit life as the default option. The problem with conventional life insurance is that:

  • You need to spend a significant amount of money purchasing it.
  • Or you have to purchase a substantial amount of it.

It doesn’t make sense spending R200 a month on half a million Rand’s worth of life insurance when you’re looking to finance a R20,000 smartphone, does it?

When you don’t qualify for conventional life insurance

The great thing about credit life cover is the zero underwriting requirement.

Take the poor chap who’s just turned 65, suffers from high blood pressure, has high cholesterol, and who wants conventional life insurance. There’s a better than average chance of him being ‘loaded’ an additional cost – or even declined – for the cover.

When they demand that you cede your existing life insurance

Imagine the scenario…

You’ve already ceded your life insurance to the bank to get the mortgage bond. You then approach another bank for a large personal loan. One of their requirements is life insurance. You spend half an hour trying to explain that you already have sufficient life insurance to cover the loan, but they want to hear none of it – cede the policy or else no loan!

Conclusion

Always remember, as a general rule, that credit life will cost you R4.50 for every R1, 000 borrowed.

A R50,000 loan will cost you R225 a month.
Most life insurance companies will offer you far more than R50, 000 life insurance for the R225 a month you’re about to spend on credit life.

And you won’t have the hassle I had when trying to cancel.

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