Credit life on a home loan protects the bond, not the building. If you die or become permanently disabled, a valid claim settles the outstanding balance of the bond. For required cover, the monthly ceiling is lower than for other credit: R2 per R1 000 for most home loans, and R2.50 for borrowers over 55 on affordable housing loans.
What it does for a bond
Credit life is linked to your home loan. If you die or become permanently disabled, a valid claim settles the outstanding balance of the bond, and the property is no longer tied to that debt. If you become temporarily disabled or lose your income, it can pay your repayments for a limited time, up to 12 months at the legal minimum.
A home loan usually runs for 20 years or more, so the way the premium is calculated matters. See how is credit life insurance calculated?
The lower ceiling for home loans
| Type of home loan | Maximum per month |
|---|---|
| Home loans, other than affordable housing | R2 per R1 000 of the deferred amount |
| Affordable housing home loans | R2 per R1 000 if you are under 55, R2.50 if you are over 55 |
On an R800 000 bond, the R2 ceiling works out at 800 × R2 = R1 600 a month. That is the most the regulations allow for required cover, not a typical premium and not a quotation.
Joint bonds
The regulated ceiling applies to each person insured. If two of you share a bond, ask:
- Is each borrower covered, or only one?
- When one borrower dies, does the insurer settle the whole bond or only that borrower’s share?
- What happens to the cover on the surviving borrower’s side?
Not the same as buildings insurance
Credit life concerns events affecting you as the borrower. Buildings insurance covers damage to the property, and it is usually a condition of the bond. Ordinary life cover pays your chosen beneficiaries. See credit life insurance vs life insurance.
Before you sign or top up
- Ask whether the cover is required or optional.
- Ask whether the premium is based on your original bond amount or on what you owe from time to time.
- If you increase the bond later, ask whether your cover increases too and whether new waiting periods apply.
- If cover is required, remember that you can use a policy of your own choice. See can I replace my bank’s credit life insurance?
To explore options for an eligible home loan, see home loan cover or request a quote.