Are You Overpaying for Credit Life Insurance?
Credit life insurance settles your debt if you die, become disabled or are retrenched. It's often added automatically when you take out a loan — and historically, many South Africans were badly overcharged for it. Since 9 August 2017, the National Credit Act caps what you can be charged, and this calculator shows you that legal maximum for your balance.
The legal caps
For most credit agreements — vehicle finance, personal loans, credit cards and store cards — the premium may not exceed R4.50 per R1,000 of your outstanding balance per month. For mortgage (home loan) agreements, the cap is lower at R2.00 per R1,000. Because the cap is based on your balance, your premium should fall as you pay the loan down.
You can shop around
Since 2017 you've had the right to substitute the credit life policy your lender offered with a cheaper one that provides the same cover. If this calculator shows you're paying above the cap — or even near it — it's worth getting quotes for standalone credit life cover and switching.
Disclaimer: Finance Atlas is not a registered Financial Services Provider (FSP). This is an educational estimate of cover needs, not a premium quote or financial advice. Actual premiums are underwritten individually based on your circumstances. Always confirm cover and pricing with a registered insurer or FSP.
Frequently Asked Questions
What is the maximum credit life insurance premium in South Africa?
Under the National Credit Act, the cap is R4.50 per R1,000 of your outstanding balance per month for most credit agreements (vehicle, personal loans, credit cards), and R2.00 per R1,000 for mortgages. These apply to credit taken on or after 9 August 2017.
Can I be forced to take the lender's credit life policy?
No. Since August 2017 you have the right to substitute the lender's policy with your own cover that meets the same minimum benefits. If you're paying at or above the cap, shopping around can save you money.
Does the premium stay the same over the loan?
It shouldn't. Because the cap is calculated on your outstanding balance, the maximum premium falls as you pay the loan down. If yours stays flat on a reducing balance, query it.