Credit life insurance: what the regulations say it must cover, and what it may exclude

The Credit Life Insurance Regulations set minimum benefits and a closed list of exclusions for credit life that a lender requires. Regulation 3 sets the minimum cover. Regulation 4 lists the only exclusions and waiting periods allowed, and says they must be explained to you.

What is credit life insurance, and which rules govern it?

Credit life insurance settles, or helps you keep paying, a credit agreement if something happens to you. Our credit life hub sets out the basics, and our guide on your right to choose your own policy covers substitution. This guide covers a different question: what a credit life policy must cover and what it may leave out.

The rules sit in two places. Section 106 of the National Credit Act says when a credit provider may require credit life and limits it to cover "not exceeding, at any time during the life of the credit agreement, the total of the consumer's outstanding obligations" (section 106(1)(a)). The Credit Life Insurance Regulations, 2017, made by the Minister of Trade and Industry under section 171 of the Act and published in Government Gazette 40606 on 9 February 2017, then set the detail. They apply to credit providers (regulation 2).

The Policyholder Protection Rules add a link on the insurer's side. Rule 3.1.1 says an insurer must not provide a mandatory credit life policy unless the policy and its costs comply with the credit life insurance regulations. Rule 3.1.2 says that applies to new policies.

Which agreements do the regulations apply to?

Regulation 9 says they apply to credit agreements entered into on and after the date of implementation. The notice that published them said they come into effect six months after publication and affect only agreements entered into on or after that date. An older agreement may be treated differently. Check the date on your credit agreement.

What must credit life cover at a minimum?

Regulation 3(2) says that, subject to sub-regulations (3) to (5), the cover must provide for at least the settlement of:

1. Death or permanent disability: the outstanding balance of your total obligations under the credit agreement.
2. Temporary disability: all your obligations under the agreement that fall due for 12 months, during the remaining repayment period, or until you are no longer disabled, whichever is the shortest.
3. Unemployment or inability to earn an income other than from disability: all your obligations that fall due for 12 months, during the remaining repayment period, or until you find employment or can earn an income, whichever is the shortest.

The regulations define "disability" as becoming so physically or mentally impaired, totally or partially, temporarily or permanently, that your ability to earn an income or meet your obligations under the agreement is impaired. "Occupational disability" is a form of disability where an impaired ability to earn arises from a physical or mental impairment that makes you unable to continue your employment, own occupation, profession or trade.

Regulation 3(7) adds that the cost must be set having regard to the actual risk and liabilities associated with the credit agreement, including the risk of the insured events happening, whether assessed on your individual profile or on a group basis. Regulation 3(1) caps what a credit provider may charge, including commission, fees and expenses. Those caps are covered in our guide on the right to choose and are not repeated here.

Who may not be charged for which risk?

Three sub-regulations stop you paying for cover you cannot use.

• Not employed when the policy starts. Regulation 3(3) says no cost relating to the risk of becoming unemployed or being unable to earn an income may be included in the cost of credit life, subject to sub-regulation (5).
• Pensioners. Regulation 3(4) says that where you are a pensioner on the date the policy is entered into, no cost relating to occupational disability may be included.
• Self-employed and informal workers. Regulation 3(5) says that where you are self-employed in the formal or informal sector, or employed in the informal sector, on the date the policy is entered into, the policy may include the cost relating to the risk of being unable to earn an income other than as a result of retrenchment or occupational disability.

Regulation 3(6) requires a credit provider, if the National Credit Regulator (NCR) asks, to demonstrate that the cost it charged complies with sub-regulations (3), (4) and (5).

What may credit life exclude?

Regulation 4(1) says credit life may exclude or limit cover for different covered events only in the circumstances in a table. The table lists the following.

Death or disability resulting from:

• the abuse of alcohol, drugs or narcotics;
• wilful self-inflicted injury or suicide;
• active participation in war, invasion, acts of foreign enemies, hostilities, civil war, insurrection, rebellion, revolution, civil commotion, uprisings or military power;
• the use of nuclear, biological or chemical weapons, or any radioactive contamination;
• participation in criminal activities;
• participation in hazardous activities such as mountain climbing, bungee jumping and speed racing; and
• any pre-existing condition you were aware of that affected you in the 12 months before cover began. Where you disclose a specific pre-existing condition before cover starts, it may be excluded only if you are clearly told of that specific exclusion.

Unemployment or inability to earn an income (other than from disability), resulting from:

• retrenchment or termination of employment within the first 3 months of cover where the term of the credit agreement is more than 6 months;
• dismissal, including for wilful misconduct such as a violation of an established, definite rule of conduct, a forbidden act, wilful dereliction of duty or misconduct;
• voluntary forfeiture of salary, wages or other employment income;
• voluntary retrenchment or termination of employment;
• resignation;
• retirement;
• participation in an unprotected strike; and
• retrenchment of which you were aware, or received notice, during the 3 months before cover began.

The word "only" matters. An exclusion that is not on this list goes beyond what regulation 4(1) allows. If you think a policy goes beyond the table, you can raise it with the insurer, the lender and the NCR.

Regulation 4(2) says these exclusions and limitations must be explained to you on the date the credit agreement is entered into and communicated to you at regular intervals afterwards. The NCR's Guideline 003/2024 also says a credit provider that is told you wish to substitute your own policy must inform you in writing of regulations 3(3), 3(4) and 3(5).

Can there be a waiting period?

Regulation 4(3) says a credit provider may apply a waiting period of up to 3 months for disability benefits only where the term of the credit agreement is more than 6 months. Regulation 4(4) says that, despite sub-regulations (1) and (3), no waiting period may be applied to any benefit for a short-term credit transaction with a term of 1 month or less.

For a credit life policy written as a microinsurance policy, Rule 2A.6.3 of the Policyholder Protection Rules says it may not impose any waiting period other than those allowed by regulation 4.

Can extra benefits be added?

Yes, within limits. Regulation 5(1) says that where the policy settles your total obligations on temporary disability and inability to earn an income, the maximum cost in regulation 3 may be increased by the amount that regulation 5(1) sets for both benefits. Regulation 5(2) says the credit provider may not compel you to take out cover for those benefits. Whether a particular policy includes them, and at what cost, is a matter for the provider and the insurer.

Where cost is charged annually, regulation 6 sets the maximum as the monthly limit multiplied by 12, or by the number of months in a shorter period.

What should you check in your own agreement?

These are questions the regulations make worth asking. They are not advice on any policy.

1. What date was the credit agreement entered into, and so do the regulations apply?
2. Was I employed, self-employed, a pensioner or not working on the date the policy began, and does the cost of job-loss cover reflect that?
3. Which exclusions and waiting periods does the policy list, and were they explained to me?
4. If the lender proposed the policy, was I told I could substitute my own?
5. Is the cost within the limits in regulation 3?

If the answers do not look right, the lender, the insurer and the NCR are the places to raise it. Our guide on credit life claims and complaints sets out how.

How does Olvian fit in?

Olvian is a lead-referral service. If you ask about credit life, your request goes to licensed providers who pay Olvian a fee and then call you. We do not sell credit life, we do not offer or advertise credit, and we do not tell you which policy to take or whether to switch. The licensed provider that calls you can explain what its policy covers against the minimums above.

Sources

Checked on 31 October 2026. Olvian is not a financial services provider and this guide is information, not advice.

• Credit Life Insurance Regulations, 2017, Government Notice 103, Government Gazette 40606, 9 February 2017: regulations 2 to 9.
• National Credit Act 34 of 2005, section 106: credit insurance
• Policyholder Protection Rules (Long-term Insurance), Rule 3: credit life insurance
• Rule 2A.6: waiting periods
• National Credit Regulator, Guideline 003/2024 on the application of the Credit Life Insurance Regulations (June 2024)