In short: Credit life insurance pays off or pays your loan if you die, become disabled or lose your job. A lender can require you to have it, but by law you may use your own policy instead of the lender’s, as long as it gives at least the minimum benefits. The National Credit Regulations cap the cost at R4.50 per R1,000 of the amount you owe for personal loans, credit cards, store accounts and most other credit, and R2 per R1,000 for home loans. Credit is subject to affordability checks under the National Credit Act. This is general information, not financial advice.
What credit life must cover
Under the Credit Life Insurance Regulations, a policy must at least:
- Settle the outstanding debt if you die.
- Settle the outstanding debt if you become permanently disabled.
- Pay your instalments if you become temporarily disabled.
- Pay your instalments for up to 12 months if you are retrenched or lose your income (where you are employed).
If you are not employed when you take the loan, you cannot be sold retrenchment cover. Self-employed people may get cover for being unable to earn an income instead, depending on the policy.
What it can cost
| Type of credit | Maximum cost |
|---|---|
| Personal loans (unsecured credit) | R4.50 per R1,000 owed a month |
| Credit cards and other credit facilities | R4.50 per R1,000 a month |
| Developmental credit and other credit agreements | R4.50 per R1,000 a month |
| Home loans (mortgages) | R2 per R1,000 a month |
This cap includes commission, fees and expenses. On a R20,000 personal loan, the most a lender can charge is R90 a month (R4.50 x 20). The insurance cover may not be more than what you owe.
Premiums should drop as you pay off the loan
In a 2026 guideline, the National Credit Regulator said the cost and the cover should stay in line with what you actually owe. In practice that means premiums worked out on the reducing balance rather than the original loan amount. Check your monthly statement: if the premium never drops while your balance does, ask the lender why.
You can choose your own policy
Section 106 of the National Credit Act gives you the right to replace the lender’s credit life policy with one you choose, at any time. The lender must accept it if it gives at least the minimum benefits. You must give the lender the new insurer’s details within 5 business days of taking out the new policy.
Why switch?
- An existing life or disability policy may already cover the debt more cheaply.
- A standalone credit life policy may cost less than the lender’s.
- One policy can sometimes cover several debts.
Do not cancel the lender’s cover until the new policy is in place and the lender has accepted it.
Before you sign a loan
- Ask for the pre-agreement quote. It must show the credit life premium separately.
- Check the premium against the cap above.
- Read the exclusions and waiting periods. Pre-existing conditions and claims in the first months may be limited by the regulations.
- Compare the total cost with insurance included. See our personal loan calculator and credit card vs personal loan.
How to claim
- Tell the lender as soon as possible after the death, disability or job loss.
- Ask for the claim form and the insurer’s details.
- Provide proof, such as a death certificate, medical reports, or a retrenchment letter and UIF documents.
- Keep paying what you can until the claim is approved, to avoid arrears.
Families often do not know a loan had credit life. Check statements of a person who has died for credit life premiums before paying their debts.
If the lender will not help
- Complain to the lender in writing first.
- For insurance claim disputes, contact the National Financial Ombud Scheme (NFO) on 0860 800 900.
- For a lender that ignores the credit life rules, complain to the National Credit Regulator.
- If you are struggling with repayments, read what to do if you cannot pay your loan back.
Last checked: 16 October 2026. Caps are from the Credit Life Insurance Regulations, 2017 under the National Credit Act. Credit is granted subject to affordability assessment in line with the National Credit Act. Only borrow from NCR-registered credit providers. This article is general information and not financial advice.