The short answer
Yes. If your bank or credit provider required credit life, you may substitute a policy of your own choice, and the provider must accept it if it provides at least the minimum benefits in the Credit Life Insurance Regulations. Do not cancel the bank’s cover until the replacement has been accepted.
Compare like for like
| What to compare | What to look for |
|---|---|
| Premium and basis | The rate per R1 000, and whether it is charged on your original balance or on what you owe from time to time |
| Benefits | Death, permanent disability, temporary disability and unemployment, at least at the Regulation 3 minimum |
| Waiting periods and exclusions | A new policy starts new waiting periods and can exclude conditions you already have |
| Amount insured | It should follow what you owe and not materially exceed it |
| Claims process | The insurer, the evidence it needs and the deadline for reporting a claim |
Step by step
- Ask your bank for your policy schedule, the premium basis, the insured amount and your current balance.
- Get quotes for the same debt from other insurers or through a broker.
- Check each quote against the minimum benefits in Regulation 3.
- Apply, then wait until the new insurer has accepted you and confirmed the date cover starts.
- Give your bank the new insurer’s details within 5 business days of taking up the new policy, with any documents it asks for.
- Cancel the bank’s policy only after the bank confirms in writing that it accepts the replacement.
- Keep copies of everything.
What your bank can and cannot do
- It can ask for proof that the new policy provides at least the minimum benefits, and ask for its interest to be recorded on the policy.
- It cannot refuse a compliant policy just because it is not the bank’s own.
If your bank refuses, ask for its reasons in writing and refer it to section 106(4) of the National Credit Act and Regulation 7. If you are not satisfied, use the bank’s complaints process and then contact the National Credit Regulator at ncr.org.za.
When replacing may not be worth it
- The balance is small or the loan is almost paid off.
- Your health has changed and the new policy would exclude a condition.
- The retrenchment cover would restart its waiting period.
- The saving is small compared with the benefits you would lose.
General information only. It is not financial, legal or tax advice, and it is not a quotation. Your credit agreement and policy wording apply, and an enquiry does not start cover. The rules described here come from the National Credit Act and the Credit Life Insurance Regulations, which apply to credit agreements entered into on or after 10 August 2017. Older agreements may differ.