DURBAN - Getting all the right gifts and hosting a fantastic, relaxed Christmas week costs money - and in our struggling economy, a lot of South Africans use credit to manage the financial challenge.
December credit is risky, of course, particularly when it comes to the struggle of meeting monthly re-payments in the year ahead. But while February might be tough, most borrowers understand their limits, spend accordingly, and manage the risk successfully.
Making payments isn’t the only credit risk, however. A less obvious danger presented by festive season borrowing is what happens if the borrower has an accident and is disabled, or even passes away. In this case an already terrible circumstance can be compounded when family members find themselves forced to pay off the debt.
"Many of us rely a lot on credit over the festive season to meet all the demands on us. Regardless, it’s really important for everyone within the family to understand whether there are insurance policies in place for these loans, and how easy it will be to claim should the need ever arise," said Tlalane Ntuli, co-founder and Chief Operating Officer at Credit Life Insurance specialist, Yalu
Credit Life Insurance is often a requirement for personal loans, student loans, home loans in the affordable housing market and – for some banks – credit cards. But in the broader credit market it can be optional, and a lot of consumers aren’t even aware that such insurance exists, let alone whether they have policies in place that cover their debt.
Ntuli added, "The level of public awareness when it comes to Credit Life Insurance is very low. Sometimes family members go through the agony of paying off a loved-one’s debt, completely unaware that there is a policy in place for the loan that they can and should be claiming on. This is actually something I have first-hand experience of, and is part of the reason why we created Yalu. Getting caught in this situation is a cruel irony, made worse by the fact that establishing the facts is actually simple, once you know what to do".
As a Credit Life Insurance specialist, Yalu is often exposed to this scenario, and its advice to South African families as we enter the festive season is to follow a single, simple rule. Make sure all adult family members understand what loan arrangements everyone has – including whether loans have Credit Life Insurance protection, or not.
"The trick is to keep it simple. Get together for ten minutes, list the various credit lines everyone has and tick off which ones you are certain you have Credit Life Insurance cover for. This exercise puts the family in a great position to take action and make sure the risk is minimised," said Ntuli.
If family members are at a loss as to how to draw up this list, there’s no need to panic. Understanding Credit Life Insurance is simpler than it might sound.
Yalu’s web site has been specifically designed to make getting clear sight of an individual’s different Credit Life Insurance policies quick, and easy. Users enter a few personal details and are presented with a list of their Credit Life Insurance for any personal loans, student loans, revolving loans and credit cards, as well as a view of how much they could save if they move their credit life insurance to Yalu,
"If you don’t know what your Credit Life Insurance situation actually is, the site has been designed for you. It doesn’t take much more than five minutes to get the right information and to make active choices that ensure your family is protected from the risk of unforeseen events this festive season," concluded Ntuli.
Tlalane Ntuli is the co-founder and Chief Operating Officer of Yalu.