Credit life protection

[reactor_sa]

Is it compulsory to take life insurance with a personal loan? Is this bundling allowed with the CPA?
About a year and a half ago Nedbank told me it was compulsory even if I have multiple other life insurance policies.
The monthly premium I am being charged is a fixed rate that doesn't even decrease as the outstanding loan amount decreases. It doesn't seem right.

 

[iblade]

It is fully legal under the CPA, you can get insurance from any other company, but the bank has the right to only accept the insurance that meets their requirements. The easiest is to normally take the banks insurance, a bit of a scam as they have the last say and are extremely fickle when it comes to this.

 

[reactor_sa]

I worked it out; it will be cheaper to move the outstanding balance (R40 000 odd) to my credit card as the 'forced' insurance is a ridiculous premium. So that is what I will do this month or next. Absurd that I've been paying almost as much in 'admin fees' and 'insurance' as I have on interest....

 

[AvatarS]

I had the same issue with Nedbank. I had tried to discuss this with them, and so did the broker handling my other policies, and they were beyond rude and refused to consider even lowering the insured amount to the loan amount.
I was in the same position as you - a loan of around R40k and an insurance policy for more than triple that. I eventually just moved the loan over to Standard Bank, which didn't have such ridiculous requirements - my existing policies were more than sufficient.

Before I did so, I did speak to someone in the offices of either the long-term insurance ombudsman or banking ombudsman, who indicated that they were not allowed to refuse to reduce the amount or insist on taking it out with them. I didn't pursue this as it would take about about 3 months for them to consider the case, and it was just easier to move it.

 

[The_Unbeliever]

I had the same issue with Nedbank. I had tried to discuss this with them, and so did the broker handling my other policies, and they were beyond rude and refused to consider even lowering the insured amount to the loan amount.
I was in the same position as you - a loan of around R40k and an insurance policy for more than triple that. I eventually just moved the loan over to Standard Bank, which didn't have such ridiculous requirements - my existing policies were more than sufficient.

Before I did so, I did speak to someone in the offices of either the long-term insurance ombudsman or banking ombudsman, who indicated that they were not allowed to refuse to reduce the amount or insist on taking it out with them. I didn't pursue this as it would take about about 3 months for them to consider the case, and it was just easier to move it.

Bravo, you did the right thing, by voting with your wallet.

The more people start to do it, the better.

 

[LazyLion]

I also had to cede a life policy to Nedbank for my Bond... but they must have released it at some point. My Bond is down to R176,000 now and when I checked with my Financial Adviser they had released it at some point in the last ten years.