Regulation 4 lists the only circumstances in which credit life that your provider requires can exclude or limit cover. For death and disability they include abuse of alcohol or drugs, suicide, war, crime, hazardous activities and pre-existing conditions you knew about. For unemployment they include resignation, dismissal and a retrenchment in the first 3 months.
What an exclusion is
An exclusion is a circumstance in which a policy will not pay, even though an insured event such as death or disability has happened. For credit life that a credit provider requires, Regulation 4 of the Credit Life Insurance Regulations says cover may be excluded or limited only in the circumstances it lists.
Your provider must explain the exclusions to you when the credit agreement is signed and again at regular intervals afterwards.
Death and disability
| Excluded | What to know |
|---|---|
| Abuse of alcohol, drugs or narcotics | The death or disability resulted from the abuse |
| Wilful self-inflicted injury or suicide | The injury was inflicted on purpose, or the death was suicide |
| War and unrest | Active participation in war, civil commotion, rebellion and similar events |
| Nuclear, biological or chemical weapons | Their use, or radioactive contamination |
| Criminal activities | Taking part in criminal activities |
| Hazardous activities | Activities such as mountain climbing, bungee jumping and speed racing. These are examples, so ask how your policy defines them |
| Pre-existing conditions | A condition you knew about that affected you in the 12 months before cover began |
If you tell the insurer about a specific pre-existing condition before cover starts, it may only be excluded if you are clearly told about that exclusion.
Unemployment and inability to earn an income
- Retrenchment or termination of your employment in the first 3 months after cover starts, on agreements longer than 6 months.
- A retrenchment that you knew about, or were notified of, in the 3 months before cover started.
- Lawful dismissal, including dismissal for misconduct.
- Voluntarily giving up your salary or wages.
- Voluntary retrenchment or voluntary termination of your employment.
- Resignation or retirement.
- Taking part in an unprotected strike.
Waiting periods
A waiting period of up to 3 months can apply to disability benefits, but only where the credit agreement runs for more than 6 months. No waiting period can apply to a short-term credit transaction with a term of one month or less.
Other limits that are not exclusions
- Premiums usually have to be up to date when the event happens.
- Policies set deadlines for reporting a claim.
- If you were not employed when cover began, you cannot be charged for unemployment cover, so you should not expect to be covered for it.
- Temporary disability and unemployment benefits pay your repayments for a limited period. They do not clear the debt.
What to do
- Read the exclusions in your own policy and ask your provider to explain them in writing.
- Disclose any health condition before cover starts.
- If your policy for required cover excludes something that Regulation 4 does not list, ask the provider why.
See does credit life insurance cover disability? and does credit life cover retrenchment? for how the benefits themselves work.