Debt review does not end your credit life cover, and the premiums still matter. The NCR’s debt review guidelines tell debt counsellors to check that credit-linked insurance premiums are maintained and included in your payment plan. If the premiums stop, the cover can lapse, and you may be in default of your credit agreement even if you are paying the instalment.
Debt review in brief
In debt review, a registered debt counsellor assesses whether you are over-indebted and, if you are, proposes a rearrangement of your repayments. The payments are usually collected as one monthly amount by a payment distribution agency, which pays your credit providers.
Debt review changes how you repay your debts. It does not change what happens to them if you die, become disabled or lose your income. That is the job of your insurance.
What the NCR’s guidelines say
- The debt counsellor should verify that premiums for credit-linked insurance that formed part of your monthly repayments are maintained and included in the payment plan.
- Those premiums, and other insurance required under your credit agreements, should be treated as essential expenses in your budget.
- If the premium rises, the plan should be updated at the annual review.
- Failing to maintain credit-linked insurance premiums can be a default of the credit agreement in a respect other than payment, so a credit provider may treat it as a default even when your instalment is paid.
- Debt counsellors are encouraged to check whether your credit life includes retrenchment cover, because it can help if your income stops.
What you should do
- Tell your debt counsellor about every credit life policy, and give them your credit agreements and policy schedules.
- Ask them to confirm that each premium is in your payment plan and is being paid.
- Do not stop or cancel cover on your own. If it is required, you need a compliant replacement first. See can I cancel credit life insurance?
- Ask your counsellor before changing insurers, so the payment plan and your credit provider’s records stay in step.
- If you lose your income or become disabled, report a claim promptly. See how to claim credit life insurance.
Who does what
Your debt counsellor supports you. They are not the credit provider, and they do not pay your premiums. The actual credit provider and the agreed payment arrangement are what count. If you are a debt counsellor, see our debt counsellor solution.