Consumer Credit Insurance protects you, as the borrower, in the advent of accident, sickness, involuntary unemployment, death and sometimes trauma. If you are unable to work due to accident, sickness or involuntary unemployment, CCI insurance will cover your loan repayments for a stated period of time or until you are able to return to work. In the advent of death, the credit contract may be repaid in full.
The National Credit Code regulates the conduct of authorised representatives selling Consumer Credit Insurance. Under the National Credit Code;
- you cannot be forced to take out CCI insurance,
- you cannot be forced to take out CCI insurance with a particular insurer,
- the maximum commission allowed to be paid by the insurer is 20% of the premium (excluding government charges),
- details of the CCI insurance and commission are to be disclosed on the loan contract,
- a copy of the CCI policy must be provided by the insurer within 14 days after the acceptance of the proposal, and
- if you terminate your loan, any CCI insurance is also automatically terminated by the lender and a statutory amount refunded to you as a reduction in the amount you must pay to finalise the loan.
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Benefits of Consumer Credit Insurance (CCI)
- Protects your finances in the event of accident, sickness, involuntary unemployment, or death. If available and selected by you, you may also be covered for trauma.
- CCI can be easily financed into most loan contracts.
- A CCI policy can be tailor made to accommodate the areas that you feel most at risk.
- Offers financial security in the event of the unfortunate occurring.
- In the event of Death, the typical life component will pay the outstanding balance of the credit contract up to a specified maximum value.
- In the event of Disablement, the typical disability component will pay the lesser of the regular monthly loan repayment for the period of disability up to a specified limit.
- In the event of Involuntary Unemployment, the typical unemployment component will pay the lesser of the regular monthly loan repayments for 90 days or a designated maximum value per claim. There is also usually a cap on the maximum benefit payable for the entire period of the policy.
- You only pay for the portion of the cover you use as it is automatically rebated when the loan is repaid in full (section 148 of the National Credit Code & regulation 94 of the Regulations).
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