Yes. Section 106(4) of the National Credit Act gives you the right to waive the policy your credit provider proposes and substitute one of your own choice. Under Regulation 7 you can do this at any time after the credit agreement starts, and the provider must accept the new policy if it provides at least the minimum benefits.
Your right to switch
Regulation 7 of the Credit Life Insurance Regulations says you may substitute a credit life policy of your choice at any time after the credit agreement is entered into. The credit provider must accept it, provided the new policy offers at least the benefits in Regulation 3.
You must give the credit provider the details of the new insurer within 5 business days of taking up the new policy. The National Credit Regulator’s 2024 guideline confirms that the provider must also tell you about these rules in writing.
What the new policy must provide
At the legal minimum, a policy for required credit life must provide for:
- Death or permanent disability: settlement of the outstanding balance of your obligations.
- Temporary disability: payment of the obligations that fall due for up to 12 months, the rest of the agreement, or until you are no longer disabled, whichever is shortest.
- Unemployment or inability to earn an income: payment of the obligations that fall due for up to 12 months, the rest of the agreement, or until you find work or can earn again, whichever is shortest.
Your credit provider may also ask for written directions and for its interest to be recorded on the new policy, so that any payout goes to it.
What can change when you switch
- New waiting periods. A disability waiting period of up to 3 months can apply to a new policy, and a retrenchment in the first 3 months after cover starts can be excluded.
- New exclusions. A condition you knew about in the 12 months before the new cover began can be excluded.
- A different premium basis. The new insurer may calculate the premium differently. See how credit life insurance is calculated.
- Eligibility. Age and employment status when the new cover starts can affect what you are covered for.
Switching safely
Do not cancel your existing policy until the new one has been accepted and your credit provider has confirmed. For a step-by-step list, see can I replace my bank’s credit life insurance?