Group life insurance specifically written for over-indebted consumers in debt review was launched this week by the DCI – the debt counselling industry portal.
It is the first and only insurance product designed for those under debt review and can only be obtained via the DCI or registered debt counsellors.
Credit life insurance covers outstanding loans and credit obligations in the event of a credit-user’s death. Banks and retailers require this type of cover when they advance credit.
The DCI innovation comes at a time of mounting concern over the potentially high prices of credit life products sold by banks and retailers to a captive market of credit applicants. These products fall outside the National Credit Act that protects consumers from excessive interest rates and fees.
Now over-indebted consumers in debt review don’t need traditional products. They can use competitively priced, transparent DCI insurance instead.
Traditional credit life contracts are invariably tied to a repayment schedule. Cover is contingent on the creditor remaining up to date with payments. However, over-indebted individuals typically fall into arrears. This invalidates the cover and creditors can seek restitution of debts from bereaved family members.
Once a person under debt review joins the Debt Counselling Industry group life scheme, these insurance charges can be stripped out of debt repayments by sending a simple notification to all credit providers telling them about the new cover.
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