Personal Finance | Do you have insurance on your debt?

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Busang’s concern was that, under the terms and conditions it stated that if you did not claim within the first three years of the death, the claim would be deemed invalid. Photo: File
Busang’s concern was that, under the terms and conditions it stated that if you did not claim within the first three years of the death, the claim would be deemed invalid. Photo: File


City Press reader Busang wrote to us when he discovered that he and his late wife had a balance protection plan on their joint mortgage with Standard Bank. When his wife passed away in 2018, he did not know he was paying a monthly premium on insurance which would have settled the mortgage on her death.

“I recently went to the bank to collect a new bank card. While I was talking to the consultant, I asked them to check my bond payments and interest.

“While checking my bond profile, the consultant notified me about the protection plan insurance which I took with the bond. She explained the insurance to me, which I was not aware of, and that it also covers the bond balance in the event of the death of either partner.”

Busang’s concern was that, under the terms and conditions it stated that if you did not claim within the first three years of the death, the claim would be deemed invalid.

According to Standard Bank: 

Even though our terms and conditions make mention that claims must be reported within three years, each case is assessed and based on its particular circumstances and merit. We are pleased that, in this particular instance, we were able to assess and pay the claim.

“We encourage customers to claim as soon as possible, particularly on Credit Life, where death claims assessments often involve medical reports. Sourcing documents/medical reports years later could prove to be a challenge when assessing a claim.”

In Busang’s case, he was fortunate that he had continued to pay the insurance which was automatically linked to his mortgage repayment. With the premium still in place, the bank consultant became aware of the insurance, which no doubt added to the circumstances that led to Standard Bank’s validation of the claim.

If the consultant had not informed him of this insurance, he would never have known to claim and been paying every month for something he was not aware he had.

READ: Ask Maya – How many insurance policies can you have?

Insurance linked to debt is often sold without the customer’s awareness of its existence. It comes with many names, such as balance protection, but ultimately it is credit insurance.

Depending on the policy, it can pay out on death, disability and even retrenchment. Go and check all of your credit agreements such as mortgage, car finance, personal loans, credit cards and store cards and understand if you have this insurance in place. If you do, make sure your family know about it.


According to Yvonne Barnard-Theron, the assistant ombud at the Ombudsman for Long-term Insurance, a policy will specify an expiration date.

Insurance contracts, especially risk policies, would have a time bar clause – a clause prescribing the amount of time within which a policyholder or beneficiary should lodge a claim.

“It varies, depending on the type of policy or benefit, but it is usually between three and six months from the date the claim arose, such as a policyholder passing away or becoming disabled,” says Barnard-Theron, who adds, however, that while, contractually, the insurer may be entitled to repudiate the claim if it is lodged outside the time frame, that is not the end of the matter.

“In certain circumstances our office may, in terms of our equity jurisdiction, request an insurer to consider a claim despite its lateness. We do sometimes see claims lodged ‘out of time’, so to speak. We call them late submission claims,” explains Barnard-Theron.

READ: Be smart, keep your car insured

She adds that this would also be the case if there was no time bar clause in the policy, and an insurer is relying on prescription (either contractually, common law or in terms of the Prescription Act) to decline a claim.

“In deciding whether or not it would be appropriate to invoke equity, we look at a range of factors, including the explanation for the delay (whether the policyholder/beneficiary was incapacitated, such as in a coma, or the reasons he/she was unaware of the policy), the degree of lateness (a few months vs a few years), the prospects of success (would the claim have been successful had it been lodged in time) and the prejudice/potential prejudice to the insurer (is the policy off books, had the insurer ‘budgeted’ for the risk, would it still be able to properly assess the claim). This is not an exhaustive list; we consider each case on its own merits.”

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